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Honda and Yachiyo Strengthen Capital Ties


November 2006
 Filed under: HONDA CORPORATE Car News | HONDA CORPORATE Headlines

-- Toward further enhancement of the mini-vehicle business and global parts supply --

TOKYO, Japan, November 14, 2006 – Honda Motor Co., Ltd. (hereafter referred to as “Honda”) announced that it would further strengthen its capital ties with Yachiyo Industry Co., Ltd. (hereafter referred to as “Yachiyo”) to further strengthen the mini-vehicle business and the global parts supply for Honda products. At the board of directors meeting held on November 14, 2006, Honda resolved to buy the shares of Yachiyo through a tender offer, aiming to acquire more than half of the issued shares of Yachiyo. The board of directors meeting of Yachiyo adopted a resolution to the effect that the company agrees with the tender offer from Honda which currently holds 34.5% of the issued shares of Yachiyo.
Demand for fuel-efficient vehicles is getting stronger worldwide, caused by soaring gasoline prices and growing concern over the environmental issues. In Japan, the mini-vehicle market has been growing steadily while the overall vehicle demand have remained sluggish, therefore, amplifying the importance that automobile manufacturers in Japan place on the mini-vehicle business. Under these circumstances, Honda has been working to enhance its product line-up, production capacity, and sales and service network.

Honda and Yachiyo have enjoyed a favorable working relationship since 1953 when Yachiyo was contracted to undertake painting process for Honda’s motorcycle parts. Today, Yachiyo is responsible for producing the majority of mini-vehicles sold by Honda. Yachiyo also provides stamped parts for automobiles, fuel tanks, sunroofs and service parts.

Honda believes this strengthening of capital ties with Yachiyo will enable the two companies to mutually complement each other’s resources (such as people, technology, facilities, and financial resources) which Honda intends to utilize to the maximum effect. By sharing a long-term strategy, Honda and Yachiyo intend to further improve quality and competitiveness to provide mini-vehicles with specifications and features best suited for customer requirements in a timely manner. As for the parts supply, both companies aim to strengthen parts supply system required for global business expansion of Honda and for a stronger competitiveness worldwide.

Yachiyo Industry Co., Ltd. – as of the end of March, 2006
Established: August, 1953

Capital: JPY 3,685.6 million

Investment ratio:
Honda Motor Co., Ltd. 34.5%,
Eiichi Otake 20.6%,
Other 44.9%

Location: Saitama (Sayama)

Representative: Shigeru Otake, President & C.E.O.

Business activities: Manufacture and sale of motorcycle parts and automobile parts,
Manufacture of automobiles (Honda’s mini-vehicles: Life, Zest,Vamos, Hobio, Acty Truck, Acty Van)

Main operations:
Japan: Saitama (Sayama), Shizuoka (Hamamatsu), Mie (Suzuka, Yokkaichi, Kameyama), Tochigi (Sakura)
Overseas: U.S.(Ohio, Alabama), Canada, Thailand, Vietnam, China (Zhongshan, Wuhan), etc.

Number of consolidated employees: 6,022

Consolidated net sales: JPY 282,777 million (fiscal year ended March, 2006)

Ordinary profit: JPY 7,190 million (fiscal year ended March, 2006)

Other: Began over-the-counter trading at Japan Securities Dealers’ Association (present JASDAQ stock exchange) in October, 1994.
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Source: Honda Motor Co., Ltd.

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