Tencent and Sony Interactive Entertainment acquire 30.34% stake in FromSoftware

1. Purpose and reason for the third –reunion distribute

The Kadokawa Group advocates “the integration of global media and technology” with a basic strategy of stably creating intellectual property (IP) consisting of various combined contents, centered on businesses such as publishing, video, games, network services, and education. As well as launching the IP globally through the expanded use of the technology, seeking to achieve sustained growth and enhance enterprise value from a mid- to long-term perspective. FromSoftware is driving the gaming business as it keeps creating world-famous works such as Axe: Shadows Die Twice and Eldon Ring, to give full play to its advanced game IP development strength. With a view to further expanding its game business, the Group regards enhancing its game IP creation, development and deployment capabilities as one of the Group’s top priorities. In accordance with this policy, the company has decided to have FromSoftware implement the procurement of funds through third-party allocations to Sixjoy and SIEs (scheduled allocators) for the following reasons.

In 2016, Tencent took a stake in the company and merged its subsidiary Guangzhou Tianwen Jiaochuan Animation Co., Ltd. The two companies have been jointly promoting a media portfolio strategy for the Chinese market. In addition, the Company signed a capital and business alliance agreement with Sixjoy and Tencent Japan in October 2021 to strengthen strategic alliances in the animation and game fields. Tencent and its subsidiaries and affiliates (hereinafter referred to as “Tencent Group”) is a global Internet group that provides communications, social, gaming, digital content, advertising, fintech and cloud services, and operates a leading communications and social platform in the Internet industry in China.

Sony and its subsidiaries (the “Sony Group”) and the Company have established cooperative business relationships in a wide range of areas related to Sony Group’s global direct-to-consumer (DTC) business operations, branded hardware business, and gaming business. February 2021 In March, the company conducted a third-party placement with Sony as the assignee, aiming to strengthen the long-term relationship with Sony Group, create the company’s new IP, and maximize the use of existing IP in the animation and game fields.

Through the implementation of this fundraising, FromSoftware will actively invest in independent research and development of more powerful game IP to enhance FromSoftware’s development capabilities, and seek to establish a framework to expand its own distribution scope with significant growth. Global Market. In addition to the above purposes, In order to increase the number of users of the game IPs created and developed by FromSoftware in the global market, FromSoftware has decided to conduct a third-party allotment of Sixjoy within the Tencent Group. Develops and deploys mobile games and other network technologies in global markets including China, and SIE, a part of Sony Group, which has the ability to simultaneously and individually deploy gaming, video and various other media IP in global markets.

2. Summary of Third Party Placing

• Payment period: From September 7, 2022 to September 12, 2022
• Number of new shares to be issued: 3,179 ordinary shares
• Issue price: 11,450,000 yen per share
• capital getd: 36,399,550,000 yen
• Subscription or distribution method (scheduled subscriber): Through third-party rights issue (Sixjoy 1,703 shares, SIE 1,476 shares)
• Shareholding ratio after issuance:
  • Kadokawa Company: 69.66%
  • Six Lok Hong Kong Co., Ltd.: 16.25%
  • Sony Interactive Entertainment: 14.09%

(Note) Payments related to third-party distribution expected to be made on September 7, 2022 may be made on another day of the above payment period due to international remittance procedures, etc.

3. Use of capital (total paid-in capital: 36,399,550,000 yen)

• Specific use of funds:
  • Used to strengthen FromSoftware’s ability to create and develop game IP.
  • Used to establish a framework to expand FromSoftware’s own distribution in global markets.

4. Overview of capital-increasing subsidiaries

• • title: FromSoftware, Inc.
  • Place: 2-26-2 Sasazuka, Shibuya-ku, Tokyo
  • Representative title/name: Miyazaki HidetakaRepresentative Director and President
  • Business content:
    • Planning, development and sales of game software.
    • Internet content planning and development.
  • capital: 268.5 million yen

• Established: November 1, 1986
• Major shareholders and their shareholding ratios:
• The relationship between the listed company and related companies:
  • Capital Relations The Company holds 100% of the issued shares of the Company.
  • Two senior staff of the personnel relations company were seconded to related companies.
  • Business relationship The company has business dealings with related companies.

5. Summary of Subscribers

• title: Six Lok Hong Kong Limited
• Place: 29/F, Tower 3, Pacific Place, 1 Queen’s Road East, Wanchai, Hong Kong
• Representative title/name: Wang Zheng, Director; Ai Ximin, Director; Byun Jung-won Elizabeth, Director; and Tse Cheuk Yin Tiffany, Director
• Business content: Licensing and distribution of mobile games.
• capital: HKD 1,000
• Established: February 28, 2011
• Major shareholders and their shareholding ratios:
  • Tencent Holdings Limited:
• The relationship between the listed company and related companies:
  • Capital Relations:
    • Related companies hold 9,724,400 shares of the company (shareholding ratio: 6.86%) (Note 1).
  • Human relations:
  • Business relationship:
    • Since 2016, the Company and Tencent Group have maintained a strategic partnership in the publishing business through a joint venture established in Guangzhou, China. In addition, the Company, Tencent Japan and the transferee Sixjoy signed a business alliance agreement from October 29 to strengthen their strategic alliance in the animation business in 2021.

(Note 1): This item is based on the substantial shareholder report submitted by Liuyue on November 16, 2021.

(Note 2): In the share subscription agreement signed between the company and FromSoftware and Sixjoy, the company and FromSoftware have received the statement and guarantee that Sixjoy is not an anti-social force and has nothing to do with anti-social forces. The company also commissioned JP Research & Consulting, Inc.

(Address: 3-7-12 Toranomon, Minato-ku, Tokyo; Representative: Keisuke Furuno, Representative Director), an independent research institution conducts the investigation. The report they produced stated that there was no fact that Sixjoy was involved in antisocial forces. To sum up, the Company believes that Liuqu, Tencent and its executives and major shareholders have no relationship with anti-social forces.

• title: Sony Interactive Entertainment
• Place: 1-7-1 Konan, Minato-ku, Tokyo
• Representative title/name: Jim Ryan, Representative Director and President
• Business content:
  • Planning, development, and sales of hardware, software, content, and network services game station.
  • Planning, development and sales of “toio”, software and content.
• capital: 110,000,000 yen
• Established: April 1, 2010
• Major shareholders and their shareholding ratios:
• The relationship between the listed company and related companies:
  • Capital Relations:
    • Sony, the parent company of the related company, holds 2,844,950 shares of the company (shareholding ratio: 2.01%) (as of the end of March 2022).
  • Human relations:
  • Business relationship:
    • The company conducts transactions with Sony and its affiliates, such as the sale and purchase of finished goods and services.

(Note) In the share subscription agreement signed with SIE, the company and FromSoftware received the statement and assurance from SIE that it and its managers are not anti-social forces, and with respect to the share subscription agreement, they are not related to anti-social forces. any relationship exists. SIE’s parent company, Sony, is listed on the Tokyo Stock Exchange. In the “Corporate Governance Report” submitted by Sony to the Tokyo Stock Exchange on July 5, 2022, by confirming its basic position of eliminating anti-social forces and establishing related systems, that is, matters related to the internal control system Antisocial forces have nothing to do with it.

6. Third Party Allotment Schedule

• FromSoftware Board of Directors and Shareholders’ Meeting Resolutions: August 31, 2022
• Date of Share Subscription Agreement for Allotment by Third Party: August 31, 2022
• Payment period: From September 7, 2022 to September 12, 2022

(Note) The payment plan for this third-party allotment is scheduled to take place on September 7, 2022.

7. Future Outlook

The Company believes that the third-party rights issue will help to enhance the corporate value of the Group in the medium to long term, and the impact of the third-party rights issue on the Company’s consolidated financial results for the fiscal year ending March 31, 2023 is expected to be at the time of writing this report. need. When disclosure of information is required, the Company will provide information in a timely manner.