Dai Nippon Toryo has signed a share exchange to take over the roughly half of Shinto Paint it does not already own, paying in its own stock. Each Shinto share would receive 0.0824 Dai Nippon Toryo shares, and the company plans to deliver 1,399,514 shares in total, according to its extraordinary report.
Vote and timetable
Dai Nippon Toryo holds 17,052,700 Shinto shares, or 50.10% of those outstanding excluding treasury stock. It will use the simplified procedure under Article 796(2) of the Companies Act, which needs no vote of its own shareholders. If Article 796(3) requires one, it will seek approval before the effective date. Shinto must win approval at an extraordinary shareholders' meeting planned for 15 January 2027. The exchange is set to take effect on 25 February 2027, and Shinto's shares are due to be delisted on 22 February, with 19 February the last trading day. The ratio can change if the conditions behind the valuations change materially.
The stated rationale
The report says the parent-subsidiary listing has made conflict-of-interest management and decision-making slower and costlier than expected, and that two sets of internal controls, audits and disclosures add cost. Alliance benefits are visible but still limited, it says, and Shinto's profit recovery is incomplete. Shinto reported a net loss of ¥593mn in the year to March 2026.
Minority holders
Shareholders with 1,214 or more Shinto shares would receive at least one 100-share unit of Dai Nippon Toryo stock. Smaller holders would receive odd lots that cannot be sold on the market, though they can ask Dai Nippon Toryo to buy them back. Neither company obtained a fairness opinion from its valuer. The companies say Shinto's implied value exceeds the ¥90 tender offer price and the ¥127 issue price of the earlier third-party allotment.