Expansion of the Business Base Through M&A With a Peer Company (髙木証券)

「In its business operations, 東海東京証券 joined the general incorporated association Financial Advisor Association as an entrusted regular member. The association was established in January 2020 and launched in April.」

「For the IFA business, at the preparatory committee for establishing the general incorporated association “Financial Advisor Association” (provisional name), we decided to provide ongoing support, including its establishment and launch, jointly with peer companies that support its establishment.」

「Our wholly owned subsidiary 東海東京証券 and 髙木証券株式会社 (hereinafter, “髙木証券”) merged effective 1 September, with 東海東京証券 as the surviving company. Through the merger, 東海東京証券 will succeed to the sales platform built by 髙木証券 primarily in the Kansai region and seek to further improve services through the integration of branches and operations, while also reorganizing and newly developing its IFA business, thereby pursuing more effective enhancement of our group’s corporate value.」

「At a meeting of the Board of Directors held on 1 March 2019, we resolved to conduct an absorption-type merger of our consolidated subsidiaries 東海東京証券株式会社 and 髙木証券株式会社, with 東海東京証券株式会社 as the surviving company. Business combination date: 1 September 2019 (scheduled)」

「In response to the intensifying competition in the securities industry resulting from new entrants from other industries and other factors, as well as changes in the market environment, we decided to begin discussions on a merger between our subsidiaries 東海東京証券株式会社 and 髙木証券株式会社 in order to pursue further improvement in customer services and effectively maintain and enhance the corporate value of our group. The merger is scheduled for the first half of the next fiscal year.」

「At 髙木証券株式会社, which became a subsidiary in April, earnings improved, particularly in the second half, as a result of efforts to review the allocation of management resources appropriately and improve management efficiency.」

「The stock brokerage trading volume of our subsidiary 東海東京証券株式会社 increased 1.4% to 3,724 million shares, reflecting increased trading by individual investors, while stock brokerage trading value increased 23.2% to ¥3.6379 trillion. The addition of 髙木証券株式会社 to our group also contributed, and stock brokerage commissions for the group increased 39.9% to ¥1.2784 billion. Total brokerage commissions increased 33.8% to ¥1.308 billion.」

「As part of the Management Plan, we acquired shares and other securities through a tender offer in April and made 髙木証券株式会社 a consolidated subsidiary. We had previously established a business relationship with the company through the supply of products including foreign equities and domestic and foreign bonds. Going forward, in addition to this relationship, we will work to enhance corporate value across our group by jointly utilizing the management resources of both companies. The stock brokerage trading volume of our subsidiary 東海東京証券株式会社 increased 19.7% to 2,411 million shares, reflecting increased trading by individual investors, while stock brokerage trading value increased 27.2% to ¥2.2748 trillion. The addition of 髙木証券株式会社 to our group also contributed, and stock brokerage commissions for the group increased 36.7% to ¥778 million. Total brokerage commissions increased 29.9% to ¥799 million.」

「During the first quarter, as part of the “Alliance & Platform” strategy under the previous Management Plan and the “M&A of peer companies” initiative under the new Management Plan’s “pursuit of strategic themes,” we conducted a tender offer for the shares and other securities of 髙木証券株式会社, a TSE Second Section-listed company headquartered in Osaka, and made it a wholly owned subsidiary in May. We had previously established a business relationship with 髙木証券株式会社 through the supply of products including foreign equities and domestic and foreign bonds. Following its inclusion as a subsidiary, we will seek to enhance corporate value by jointly utilizing the management resources of both companies.」