ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) announced today that ITOCHU and ITOCHU Feed Mills Co., Ltd. (headquartered in Koto-ku, Tokyo; Teruo Fujishima, President & CEO; hereinafter “ITOCHU Feed Mills”) have concluded an agreement for a capital and business alliance (hereinafter “Alliance”) with Chubu Shiryo Co., Ltd. (headquartered in Chita, Aichi; Masao Hisamitsu, President & CEO; hereinafter “Chubu Shiryo”).

The feed industry currently finds itself in difficult circumstances and expects them to continue into the future. These circumstances primarily stem from the shrinking domestic market that is largely the result of the aging population and declining birthrate, two trends which are accompanied by a decrease in demand for feed, and a hike in global raw material prices. In order to strengthen the competitiveness of the feed business under these circumstances, ITOCHU and ITOCHU Feed Mills concluded an agreement for the Alliance with Chubu Shiryo. It was agreed that ITOCHU Feed Mills and Chubu Shiryo will set up a joint venture for a cooperative feed production business, and that the three ITOCHU Group companies, including ITOCHU Food Sales and Marketing Co., Ltd. (headquartered in Minato-ku, Tokyo; Hideyori Kondo, President & CEO; hereinafter “ITOCHU FOODS”), will underwrite a capital increase through the third-party allocation of newly issued shares of Chubu Shiryo (for a total of 7.37%, the percentage of the total outstanding shares after the issuance of new shares underwritten by the three ITOCHU Group companies).

A Summary of the Alliance

The alliance was formed in order to establish a competitive feed supply system and procure raw materials for feed by taking advantage of each participating company's strengths. As part of this initiative, ITOCHU Feed Mills will shift its manufacturing operations to Mirai Feed Mills Co., Ltd. (hereinafter “Mirai Feed Mills”), which it founded in April 2015, and also transfer 51% of its shares in Mirai Feed Mills to Chubu Shiryo. At the same time, ITOCHU and ITOCHU Feed Mills will underwrite a capital increase through the third-party allocation of newly issued shares of Chubu Shiryo. (Please note that ITOCHU FOODS will also participate in the underwriting to help enhance the effect of this Alliance.)
Through this Alliance, ITOCHU Feed Mills will continue its feed manufacturing business at Mirai Feed Mills, combine its technical capabilities with Chubu Shiryo’s skills to improve quality and build a value chain, from production through to marketing and sales, that is competitive in both quality and quantity.

Overview of the Alliance scheme

The figures are calculated based on the total number of shares, including the 2,111,400 shares that the three ITOCHU Group companies will underwrite. It should be noted, though, that excluding the shares to be underwritten by the three ITOCHU Group companies, the calculation does not take into account the increase in the number of the common shares by the offer made in the "Notice Regarding Issuance of New Common Shares through Third-Party Allocation," which was officially announced by Chubu Shiryo as of July 31 (July 31).

Company overview of Mirai Feed Mills