Ichiyoshi Securities Co. Ltd. : Announcement of Execution of Formal Merger Agreement with Daihoku Securities Co., Ltd.

(Press release on January 9, 2013) (English translation for reference purposes only)

ICHIYOSHI SECURITIES CO., LTD.

Listed on: Tokyo Stock Exchange (1st Section) and
Osaka Securities Exchange (1st Section) (Stock code: 8624) President & Representative Executive Officer: Mr. Yasuaki Yamasaki Enquiry to: Mr. Nobuaki Tsuji, Manager of Public Relations
Tel: [phone]

Announcement of Execution of Formal Merger Agreement with

Daihoku Securities Co., Ltd.

Today on January 9, 2013, Ichiyoshi Securities Co., Ltd. ("Ichiyoshi") executed a formal merger agreement with Daihoku Securities Co., Ltd. ("Daihoku") (an associated subsidiary accounted for by Ichiyoshi on an equity-method basis) for Ichiyoshi to merge with Daihoku, effective on March 4, 2013. (Daihoku became an associated subsidiary when Ichiyoshi acquired 20.0% of Daihoku's issued shares through subscription for Daihoku's third-party allocation of new shares on October 28, 2010.) Since the merger is to be effected pursuant to Article 796-3 of the Company Law, this announcement is being made in a simplified manner under the applicable rules of the Tokyo Stock Exchange.
1. Purpose of merger:
To further enhance community-based activities through higher synergy of sales forces with Daihoku, headquartered at Morioka City, Iwate Prefecture.
2. Some details of merger: (1) Schedule:
December 5, 2012: Ichiyoshi's Board of Directors' meeting to approve a basic merger agreement.
December 5, 2012: Execution of the basic merger agreement.
January 9, 2013: Ichiyoshi's Board of Directors' meeting to approve a formal merger agreement.
January 9, 2013: Execution of the formal merger agreement.
January 31, 2013: Daihoku's shareholders' meeting to approve the formal merger agreement (scheduled).

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March 4, 2013: Effective date of merger (scheduled).
(The merger pursuant to Article 796-3 of the Company Law does not require
Ichiyoshi to hold its shareholders' meeting for its approval.)
(2) Form of merger:
The merger is to be effected in such a manner that Ichiyoshi will be a surviving company and Daihoku will be liquidated. In the merger, Daihoku's shareholders will receive shares of Ichiyoshi (to be allocated out of treasury shares).
(3) Merger ratio and method of ratio determination:
Ichiyoshi Daihoku

(surviving company) (non-surviving company) Merger ratio: 1 3.33

Namely, 3.33 shares of Ichiyoshi will be allocated to 1 share of Daihoku. Such allocation will be made to Daihoku's issued shares less 52,231 shares which Ichiyoshi already holds. Thus, the number of Daihoku's shares qualified for such allocation is 197,769 shares (namely, its

250,000 issued shares less 52,231 shares). As a result, Ichiyoshi will allocate 658,571 shares out of its treasury stock to Daihoku's shareholders.

In order to determine a fair and reasonable merger ratio, Corporate Directions, Inc. ("CDI") was appointed as a third-party intermediary for appraisal. Following the appointment, CDI performed a due-diligence review on Daihoku and its business and drew up a stock price valuation report. In the process of price determination, CDI adopted an adjusted net-assets evaluation method with Daihoku's non-listed status taken into account. On the basis of the stock price valuation report, Ichiyoshi and Daihoku negotiated and agreed on the above-mentioned merger ratio.
(4) Treatment of warrants for new shares and convertible debentures, if any, issued by Daihoku:
Daihoku has not issued any warrants for new shares nor any convertible debentures.
3. Outlines of Ichiyoshi and Daihoku (as of September 30, 2012): (1) Outline of Ichiyoshi (consolidated basis):
(i) Registered name: Ichiyoshi Securities Co., Ltd.

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(ii) Business: Financial instruments-trading business
(iii) Date of incorporation: August 18, 1950
(iv) Head office: 2-14-1, Hatchobori, Chuo-ku, Tokyo
(v) Corporate representative: Mr. Yasuaki Yamasaki, President & Representative Executive Officer
(vi) Capital stock: 14,577 million yen
(vii) Number of issued shares: 44,431,386 shares of common stock
(viii) Net assets: 22,714 million yen (ix) Total assets: 31,770 million yen (x) Net assets per share: 526.61 yen
(xi) Operating revenue: 7,118 million yen (xii) Operating income: 78 million yen (xiii) Current income: 84 million yen
(xiv) Net income: 47 million yen
(xv) Net income per share: 1.09 yen
(xvi) Accounts-settlement day: March 31 (xvii) Number of employees: 950
(xviii) Major shareholders as of September 30, 2012 (and % of their holdings): Nomura Land & Building Co., Ltd. (11.92%)
State Street Bank and Trust Company (Standing proxy: Tokyo Branch of
Hong Kong Shanghai Bank) (5.06%)
State Street Bank and Trust Company 505223 (Standing proxy: Mizuho
Corporate Bank-Settlement Dept.) (4.63%) Japan Trustee Services Bank, Ltd. (3.45%) Ichiyoshi Securities Co., Ltd. (3.22%)
State Street Bank and Trust Company (Standing proxy: Mizuho
Corporate Bank-Settlement Dept.) (2.14%) The Master Trust Bank of Japan, Ltd. (2.10%) Nomura Research Institute Inc. (1.98%)
J.P. Morgan Clearing Corp.- Sec (1.64%)
State Street Bank and Trust Company 505225 (Standing proxy: Mizuho
Corporate Bank-Settlement Dept. (1.48%)
(2) Outline of Daihoku (parent company basis):
(i) Registered name: Daihoku Securities Co., Ltd.
(ii) Business: Financial instruments-trading business
(iii) Date of incorporation: May 6, 1948

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(iv) Head office: 1-2-14, Nakanohashi-dori, Morioka City, Iwate Prefecture (v) Corporate representative: Mr. Kiyohiko Ohtubo, President & Director (vi) Capital stock: 128 million yen
(vii) Number of issued shares: 250,000 shares
(viii) Net assets: 836 million yen
(ix) Total assets: 1,091 million yen
(x) Net assets per share: 3,347.54 yen (xi) Operating revenue: 59 million yen (xii) Operating income: - 46 million yen (xiii) Current income: - 43 million yen (xiv) Net income: - 43 million yen
(xv) Net income per share: - 175.72 yen (xvi) Accounts-settlement day: March 31 (xvii) Number of employees: 20
(xviii) Major shareholders as of September 30, 2012 (and % of their holdings): Ichiyoshi Securities Co. Ltd. (20.9%)
Ms. Tomoko Itoh (7.5%) Mr. Hiro-o Yoshida (4.4%)
Kita-Nippon Bank, Ltd. (4.0%) Bank of Iwate, Ltd. (4.0%)
Ms. Yukiko Sasaki (3.1%)
Mr. Kiyohiko Ohtsubo (2.8%) Mr. Kenichiro Murai (2.8%) Tohoku Bank., Ltd. (2.7%) Mr. Takahiro Terui (2.6%)
4. Status of Ichiyoshi after merger:
The merger will not lead to any change in the corporate name, head office location, title and name of corporate representative, business, capital stock and accounts-settlement day of Ichiyoshi.
5. Effect of merger on Ichiyoshi:
The effect of the merger on Ichiyoshi's business will be immaterial.
(End)

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