Tencent and Sony Interactive Entertainment combined acquired 30.34 percent of FromSoftware

1. Purposes and a third reason-party, party Personalization

The Kadokawa Group advocates a “global media mix with technology” as its core strategy that combines the stable creation of intellectual property (IP) consisting of a variety of portfolio content mainly in publishing, video, gaming, web service and education such as in addition to spreading this intellectual property on Global scale through the expanded use of technology, striving for sustainable growth and enhancing company value from a medium to long-term perspective. FromSoftware leads the gaming business continually creating world-famous businesses, such as Sekiro: Shadows die twice And the elden ring, and leveraging its cutting edge power in IP game development. With a focus on further expansion in the gaming field, the group recognizes enhancing capabilities to create, develop and publish game IP as one of the group’s highest priorities. Consistent with this policy, the Company has decided that FromSoftware shall effect the purchase of funds by assigning a third party to Sixjoy and SIE, the scheduled allocators, for the reasons described below.

Tencent has acquired the capital of Guangzhou Tianwen Kadokawa Animation and Comics Co., Ltd. Ltd., a combined subsidiary of the company, was established in 2016, and the two companies are jointly promoting their own media mix strategy targeting the Chinese market. In addition, the company, Sixjoy, and Tencent Japan have entered into a venture capital and business alliance agreement effective October 2021 to strengthen their strategic alliance 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 services, games, digital content, advertising, financial technology and cloud services, and operates the leading social media platform in the Internet industry in China.

Sony and its subsidiaries (hereinafter referred to as the “Sony Group”) and the Company have developed a collaborative working relationship across a wide range of areas relating to the Sony Group’s global direct-to-consumer business (DTC) operations, branded hardware business, and games business. . In February 2021, the company conducted a third-party allotment with Sony as the allotment with the goal of strengthening its long-term relationship with the Sony group, creating a new IP for the company and optimizing the existing IP in the animation and game arenas.

By implementing the money purchase, FromSoftware will aim to proactively invest in developing a more robust IP game for itself to strengthen FromSoftware’s development capabilities and will seek to create a framework that will allow it to scale its deployment into a global store. In addition to these purposes, in order to increase the number of users in the global marketplace for the gaming IP that FromSoftware creates and develops, FromSoftware has decided to make a third party allocation to Sixjoy within the Tencent Group, which is strong in its capabilities to develop and publish mobile games and other networking technologies in the Global market including China, and SIE within the Sony group, which is strong in its capabilities to deploy IP in games, videos and various other media in the global market, both simultaneously and separately.

2. Third Party Customization Scheme

• Payment period: From September 7, 2022 to September 12, 2022
• Number of new shares to be issued: 3,179 shares of common stock
• Issue price: 11,450,000 yen per share
• capital to be takes overDr: 36399.550.000 yen
• Subscription or Allocation Method (Scheduled Subscriber): By third party allotment (Sixjoy 1,703 shares, SIE 1,476 shares)
• Post-issue contribution percentage:
  • Kadokawa Corporation: 69.66%
  • Sixjoy Hong Kong Limited: 16.25%
  • Sony Interactive Entertainment: 14.09%

(Note) Payment related to the third party assignment, which is expected to take place on September 7, 2022, may be made on another day during the above payment period due to the procedures required for international transfer, among other factors.

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

• Specific use of funds:
  • To enhance FromSoftware’s capabilities to create and develop IP for the game.
  • To create a framework that will allow the expansion of FromSoftware’s deployment into the global market.

4. The scheme of the subsidiary subject to the capital increase

• • Title: FromSoftware, Inc.
  • Site: 2-26-2 Sasazuka, Shibuya-ku, Tokyo
  • Nickname/Actor’s Name: Hidetaka MiyazakiDeputy Director and President
  • Work contents:
    • Planning, development and sales in relation to game software.
    • Internet content planning and development.
  • capital: 268,500,000 yen

• Date of Establishment: November 1, 1986
• Major shareholders and their percentage of contribution:
• The relationship between the listed company and the related company:
  • Capital relations The company owns 100% of the outstanding shares of the company.
  • Employee Relations Two company officers are seconded to the relevant company.
  • Business Relationships The company and the company related business transactions.

5. Outline of scheduled subscribers

• Title: Sixjoy Hong Kong Limited
• Site: 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
• Nickname/Actor’s Name: Wang Zheng, Director; I Zimin, Director; Byun Jong-won Elizabeth, Director; Tse Cheok-yen Tiffany, director
• Work contents: Licensing and publishing mobile games.
• capital: 1,000 Hong Kong dollars
• Date of Establishment: February 28, 2011
• Major shareholders and their percentage of contribution:
  • Tencent Holdings Limited:
• Relationship between the listed company and the related company:
  • Capital Relationships:
    • The company in question owns 9,724,400 shares (voting-to-equity ratio: 6.86%) of the company’s stock (note 1).
  • Employee Relations:
  • business relationships:
    • The company and Tencent Group have maintained a strategic partnership in publishing through a joint venture company in Guangzhou, China since 2016. In addition, the company, Tencent Japan, and allottee Sixjoy have entered into a business alliance agreement effective October 29, 2021 to strengthen their strategic alliance in field of animation.

(Note 1): This clause is based on Sixjoy’s major contributor’s report on November 16, 2021.

(Note 2): In the Company’s and FromSoftware’s share-sharing agreement with Sixjoy, the Company and FromSoftware have received representation and warranty from Sixjoy that they are not an antisocial force and have no ties to antisocial forces. The company has also commissioned JP Research & Consulting, Inc.

(Address: 3-7-12 Toranomon, Minato-ku, Tokyo; Representative: Keisuke Furuno, Representative Director), an independent research organization, to conduct an investigation. The report that was produced states that there are no facts to suggest that Sixjoy is involved with antisocial forces. Based on the foregoing, the company has determined that Sixjoy, Tencent, their officers and major shareholders have no ties to antisocial forces.

• Title: Sony Interactive Entertainment Inc.
• Site: 1-7-1, Konan, Minato-ku, Tokyo
• Nickname/Actor’s Name: Jim Ryan, Representative Director and President
• Work contents:
  • Plan, develop and sell hardware, software, content, and network services for Play Station.
  • Plan, develop and sell toio software and content.
• capital: 110,000,000 yen
• Date of Establishment: April 1, 2010
• Major shareholders and their percentage of contribution:
• Relationship between the listed company and the related company:
  • Capital Relationships:
    • Sony, the parent company of the related company, owns 2,844.950 shares (voting equity ratio: 2.01%) of the company’s stock (as of the end of March 2022).
  • Employee Relations:
  • business relationships:
    • The Company engages in transactions such as the sale and purchase of finished products and services with Sony and its subsidiaries.

(Note) In the Stock Subscription Agreement with SIE, the Company and FromSoftware have received representation and warranty from SIE that they and its officers are not an antisocial force and do not have relations with antisocial forces in connection with the Stock Subscription Agreement. Sony, the parent company of SIE, is listed on the Tokyo Stock Exchange. By asserting its primary position on eliminating antisocial forces and establishing related regulations, which were referred to as issues of internal control systems in Sony’s Corporate Governance Report submitted to the Tokyo Stock Exchange on July 5, 2022 the company determined that Sony and its officers are not They have absolutely no connection to antisocial forces.

6. Third party customization schedule

• Board Resolution and FromSoftware General Shareholders Meeting: August 31, 2022
• Date of the share subscription agreement in relation to the third party allotment: August 31, 2022
• Payment period: From September 7, 2022 to September 12, 2022

(Note) Payment for this third party assignment is due to be made on September 7, 2022.

7. Outlook

The company believes that the allocation of the third party will contribute to the medium to long-term improvement of the company’s value to the group, while the impact of the allocation of the third party on the company’s consolidated financial results for the financial year ending March 31, 2023 is expected, at the time of this report, to be minor. When there is a need to disclose information, the company will provide the information immediately.