OMRON All for Healthcare

2016.06.09

Notice regarding Business Partnership between Fukuda Denshi and Omron Healthcare, and Transfer of Shares of Omron Colin to Fukuda Denshi

Tokyo Japan─Fukuda Denshi Co., Ltd. (hereinafter referred to as "Fukuda Denshi") and Omron Healthcare Co., Ltd. (hereinafter referred to as "Omron Healthcare") announced today that they have signed a memorandum of understanding to form a business partnership in the fields of home medical care and overseas business. The two parties have also entered into an agreement whereby the shares of stock held by Omron Healthcare of its subsidiary Omron Colin Co., Ltd. (hereafter referred to as "Omron Colin") will be transferred to Fukuda Denshi so that Omron Colin will become a subsidiary of Fukuda Denshi.

1. Market Background
In recent years, the environment surrounding the medical equipment industry has undergone major change. In Japan, people aged 65 or over are expected to number 36.57 million in 2025, reaching a peak of 38.78 million in 2042. As the aging of the Japanese population accelerates rapidly, a community-based comprehensive care system will be needed to provide total support for the elderly, covering everything from housing to medical care, nursing, disease prevention, and livelihood support. The deployment of an information technology-based medical care system has been promoted for the objectives of preventing medical accidents and more efficiently providing patients with appropriate treatment. Outside Japan, the middle-income class has expanded not only in developed countries but in developing nations as well. This has brought about an increase in people suffering from cardiac disease caused by high blood pressure or lifestyle disease, which has become a social problem worldwide. Addressing this problem is an area that holds great promise for future growth for the Japanese medical industry, and an area in which the industry will be able to make a substantial contribution. These situations put the medical equipment markets inside and outside of Japan in a phase of major transformation.

2. About the Business Partnership and Transfer of Shares
To quickly respond to changes in the market environment, Fukuda Denshi and Omron Healthcare realized the need for creating new businesses in home medical care and other fields, and accelerating global-scale business expansion. To respond to this need, the two companies have decided to conclude a memorandum of understanding to form a business partnership to draw on the combined competencies of each company. As part of this partnership, Fukuda Denshi will acquire all shares of Omron Colin, which specializes in the field of hospital medical equipment, from Omron Healthcare, in order to further strengthen its hospital medical equipment business. Omron Healthcare in turn will focus more resources on the development of devices─the area of its core competencies. In this way, both companies will strive to boost their competitive strengths in their respective fields.

Since its establishment in 1939, Fukuda Denshi has lived up to its corporate philosophy of "contributing to medical advances by fulfilling our social mission and developing medical electronic equipment." In conformance with this philosophy, Fukuda Denshi has contributed significantly to promoting health through the manufacture and sales of a comprehensive range of medical equipment, centering on respiratory and cardiovascular systems such as electrocardiographs. While medical equipment becomes more and more compact and sophisticated in functions, the requirements for medical care are becoming increasingly diversified. In order to satisfy these diversified needs, the Fukuda Denshi Group provides products that comprehensively support medical care, ranging from prevention of disease to medical examination and treatment, and even home medical care─the area of the Group's core competencies. Moreover, efforts are being concentrated on strengthening safety management and maintenance service for its medical equipment through an extensive service network consisting of more than 190 sales offices across Japan. In this way, Fukuda Denshi helps improve operational efficiency and quality of work in medical settings. In home medical care─a field with growing importance reflecting the rapidly increasing aging population─Fukuda Denshi offers oxygen concentrators and artificial ventilators for home care, along with maintenance support. With its broad product offering that includes equipment for testing and treatment of sleep apnea syndrome (SAS), Fukuda Denshi helps provide a safe, reliable and comfortable environment for home care patients, which enhances the quality of their lives.

Omron Healthcare's mission is to "help realize healthy and comfortable lives for people around the world." Based on this mission, Omron Healthcare released Japan's first home-use blood pressure monitor in 1973. Since then, over many years the company has accumulated much expertise in developing high-quality home-use healthcare products. Omron Healthcare has also made an aggressive foray into overseas markets, now having operations in more than 110 countries throughout the world. With respect to hospital medical equipment, Omron Healthcare acquired Colin Medical Technology Corporation (now Omron Colin) in June 2005. Since then, Omron Healthcare has offered patient monitoring products and services for use in operating rooms and bedside use, as well as service to support nurses, such as automatically transferring a patient's clinical data to an electronic medical record system. This helps enhance the safety of medical practices and offers a sense of security for both patients and medical professionals. As the focus of medical care shifts to the area of disease prevention, Omron Healthcare is also committed to offering equipment used for medical examination, such as early diagnosis of arteriosclerosis and monitoring of visceral fat. By facilitating the use of data monitored with these devices and home-measured vital signs data in medical settings, Omron Healthcare also helps prevent and manage lifestyle diseases.

Through the acquisition of shares of Omron Colin, Fukuda Denshi will be able to acquire Omron Colin's product lineups, such as vital signs monitors and medical examination equipment. This will enable Fukuda Denshi to offer hospital medical systems with higher added value than ever before. The business partnership will also enable synergistic combinations. For instance, Fukuda Denshi offers home medical care service using home-care oxygen concentrators and continuous positive airway pressure (CPAP) devices. This can be combined with wearable medical devices that Omron Healthcare develops by drawing on its advanced blood pressure monitoring technology and its technology to miniaturize devices. This combination will lead to the creation of a new home medical care business. The use of Omron Healthcare's global sales network covering China, Asia and the rest of the world will also allow Fukuda Denshi to promote global sales of its products. The main objectives of the business partnership and acquisition of shares are as follows:

  1. (1)Joint development of new businesses in the field of home medical care
  2. (2)Joint development of global business
  3. (3)Reinforcement of medical testing equipment and vital signs monitor businesses
    1. 1)Strengthening of product lines (Blood pressure monitors, blood pressure and pulse wave screening devices, vital signs monitors, etc.)
    2. 2)Alliances in the field of cardiovascular systems

3. Corporate Data

(1) Overview of Fukuda Denshi

(1) Name Fukuda Denshi Co., Ltd.
(2) Headquarters 39-4, Hongo 3-chome, Bunkyo-ku, Tokyo, Japan
(3) Titles and Names of Representatives Chairman and CEO Kotaro Fukuda
President and COO Daijiro Shirai
(4) Business Lines Development, manufacture, sales, import and export of medical electronic equipment
(5) Capital 4,621,600,000 yen
(6) Date of Establishment July 6, 1948
(7) Employees 3,409 (as of March 31, 2016, consolidated)

(2) Overview of Omron Healthcare

(1) Name Omron Healthcare Co., Ltd.
(2) Headquarters 53, Kunotsubo, Terado-cho, Muko, Kyoto, Japan
(3) Title and Name of Representative President and CEO Isao Ogino
(4) Business Lines Development and sales of home-use and professional-use healthcare products, development and sales of health management software, wellness and health promotion service, etc.
(5) Capital 5 billion yen
(6) Date of Establishment July 1, 2003
(7) Employees 4,964 (892 in Japan, 4,072 overseas) (as of March 31, 2016, consolidated)

(3) Overview of Omron Colin

(1) Name Omron Colin Co., Ltd.
(2) Headquarters Nihonseimei Koishikawa Bldg.,
12-14, Koishikawa 1-chome, Bunkyo-ku, Tokyo, Japan
(3) Title and Name of Representative President and CEO Yutaka Kobayashi
(4) Business Lines Planning, development and sales of medical equipment and systems, medical care support service, etc.
(5) Capital 300 million yen
(6) Date of Establishment May 17, 2000
(7) Employees 253 (as of March 31, 2016, consolidated)

Please note that the information discussed above may be subject to change depending on the results of the Japan Fair Trade Commission's review of the business combination plan conducted in conjunction with the notification stipulated in the Antimonopoly Act.

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