News Releases

Notice regarding acquisition of U.S. Ambry Genetics Corporation by joint investment

July 6, 2017

To whom it may concern,

Company Name: Konica Minolta, Inc.
Representative: Shoei Yamana, President and CEO
Stock Exchange Listing: Tokyo (First Section)
Local Securities Code Number: 4902
Contact: Mami Iwamoto, General Manager, Corporate Branding Division
Tel: (81) 3-6250-2100

Konica Minolta, Inc. (the “Company” or “Konica Minolta”) is pleased to announce that today, it entered into a definitive agreement to acquire Ambry Genetics Corporation (California, USA, “Ambry”) by joint investment with Innovation Network Corporation of Japan (“INCJ”), based on the Company’s board resolution of May 26, 2017.

1. Purpose of Transaction

With the world's most advanced genetic diagnostic technology, advanced product development capabilities, diversified testing options, high examination processing capacity, and overwhelming strength in genetic counselor channels, Ambry has established its position as a leader in the U.S. genetic testing market in oncology and other diseases, including heart and neurological disease and respiratory diseases such as cystic fibrosis. To date, Ambry has conducted more than one million genetic tests and has identified over 45,000 mutations in 500 types of genes.

This acquisition is the first in a series of strategic initiatives to secure a leading position for Konica Minolta in the precision medicine (personalized medical treatment) field. Konica Minolta has committed to providing the most advanced genetic diagnostic technology in the world using cutting edge IT analytical technology that makes full use of bioinformatics, and through Ambry’s state-of-the-art testing laboratory, the ability to offer large-scale services. Furthermore, by combining Konica Minolta's High Sensitive Tissue Testing (HSTT), proprietary protein-sensitive quantitative detection technology, with Ambry's genetic diagnostic technology, together Konica Minolta and Ambry have two core technologies indispensable for patient grouping and drug development. Based on the technologies of both companies, Konica Minolta will ensure further growth and will become a global leader by expanding Ambry’s services to Japan, Asia, and Europe from the US.

2. Transaction Summary

Under the terms of the agreement, Konica Minolta will acquire Ambry shares through its wholly-owned U.S. healthcare distributor company Konica Minolta Healthcare Americas, Inc. (“KMHA”) with INCJ, where KMHA will acquire 60% and INCJ will acquire the remaining 40%, by an all-cash transaction.

The transaction is expected to close in the third quarter of 2017, subject to necessary regulatory approvals. Ambry would thereafter become a consolidated subsidiary of Konica Minolta. subject to a reverse triangular merger between Konica Minolta Geno., Inc. 1 and Ambry, where the latter is the surviving entity.

1 100% subsidiary (“SPC2”) of Konica Minolta PM., Inc. (“SPC1”), which is 60% owned by KMHA and 40% by INCJ. INCJ has the option to sell INCJ’s 40% ownership in SPC1 to the Company as per an agreement between the two parties.

The transaction scheme and post-transaction structure is as follows:

KMI Konica Minolta, Inc.
KMHUS Konica Minolta Holdings U.S.A., Inc. (US holding company)
KMHA Konica Minolta Healthcare Americas, Inc. (US distribution company)
INCJ Innovation Network Corporation of Japan
SPC1 Konica Minolta PM., Inc. (SPC established from join investment by KMHA and INCJ)
SPC2 Konica Minolta Geno., Inc. (special purpose company formed under SPC1 for the merger with Ambry, non-surviving entity of the merger)
Ambry Ambry Genetics Corporation (surviving entity of the merger)

3.About the Acquiring Entities

(KMHUS: US holding company)
(1) Name Konica Minolta Holdings U.S.A., Inc.
(2) Location New Jersey, U.S.A.
(3) Representative Toshimitsu Taiko, CEO
(4) Business US holding company
(5) Capital USD 968,264,000
(KMHA: US distribution subsidiary)
(1) Name Konica Minolta Healthcare Americas, Inc.
(2) Location New Jersey, U.S.A.
(3) Representative David L. Widmann, President and CEO
(4) Business Sales of medical imaging diagnostic systems in the US and other countries
(5) Capital USD 5,300,000

4. About Ambry Genetics Corporation (surviving entity)

(1) Name Ambry Genetics Corporation
(2) Location Aliso Viejo, CA, U.S.A.
(3) Representative Charles L.M. Dunlop, Chairman and President
(4) Business Description Provider of genetic diagnostic solutions for diseases and clinical specialties
(5) Capital USD 102
(6) Year Founded 1999
(7) Major shareholder and shareholding ratio Charles L.M. Dunlop 44.27%
Others 55.73%
(8) Relationships with the Company Capital Relationship None
Personnel Relationship None
Business Relationship None
(9) Consolidated financial results of the company in the last three years (US GAAP) 2
(USD in thousands unless otherwise specified)
Fiscal term Ending June, 2014 Ending June, 2015 Ending June, 2016 1/7/2016 ? 31/3/2017 estimates 3
Shareholders’ equity 30,179 53,686 84,730 75,624
Total Assets 48,463 100,289 132,734 115,402
Net Asset per share (USD) 26.9 48.5 83.1 74.1
Revenues 96,777 161,872 287,943 162,525
Income from operations 40,149 60,371 139,711 19,760
Adjusted EBITDA 4 46,570 73,619 159,468 50,084
Net Income 26,423 39,671 86,389 5,119
Net Income per share (USD) 23.5 35.9 84.7 5.0

2 Consolidated basis

3 Numbers are estimated based on the most recent information provided by Ambry as of this date for the period of July 1, 2016 to March 31, 2017, and therefore are non-audited

4 Consolidated EBITDA adjusted for extraordinary costs by Ambry management and not based on USGAAP

5.About the Sellers

(1) Name Charles L.M. Dunlop*
(2) Place of residence United States
(3) Relationship None

※ Ambry shares will be acquired from over 150 individuals including Charles L.M. Dunlop. There is no capital, personnel, business relationships between the Company and any of the sellers

6.Acquiring shares, price and changes in ownership

(1) Number of shared before transaction
(Number of voting rights: -)
(Proportion of voting rights:-%)
(2) Number of acquiring shares 1,020,792 5
(Number of voting rights:1,020,792)
(3) Transaction cost Shares of the company etc. USD 800 million 6 7
Advisory costs etc. (estimate) JPY 2.2 billion
Total (estimate) JPY90.2billion (@USD1=JPY110)
(4) Number of shares after transaction 1,020,792 8
(Number of voting rights:1,020,792)
(Proportion of voting rights:100%)

5 Total number of Ambry shares acquired by the Company and INCJ through SPC1

6 Subject to price adjustments in accordance with the definitive agreement

7 A performance-based earn-out of up to US$200 million may be paid out, based on Ambry’s fiscal performance in the next two years

8 Total number of Ambry shares owned by the Company and INCJ through SPC1


(1) Decision by Representative Executive Officer July 6, 2017
(2) Signing Date July 6, 2017
(3) Closing Date October 2017 (projected)*

* Subject to antitrust approvals in US and other applicable countries.

8.Future outlook

The impact of the transaction on the Company’s future performance is currently under review. Any findings that require disclosure will be reported in an appropriate and timely manner.