Sumitomo Electric to sell subsidiary, expects significant profit

Sumitomo Electric Industries (SEI) has agreed with Daiwa House Industry to a tender offer for Sumitomo Densetsu (SEM), SEI's consolidated subsidiary. SEI will not tender its SEM shares in the offer but will subsequently transfer all its SEM shares through a share buyback by SEM. This move will effectively deconsolidate SEM from SEI and is part of SEI's "Sumitomo Electric Group 2030 Vision" to optimize management resource allocation.

The tender offer price for SEM shares is JPY 9,760, with the share buyback price at JPY 6,877. This ensures SEI's after-tax proceeds from the share buyback are equivalent to those if it tendered its shares in the offer. The total transfer price for the share buyback is estimated at JPY 122.6 bn.

Following these transactions, SEI anticipates an extraordinary profit of JPY 117 bn in its non-consolidated financial statement and JPY 70 bn in its consolidated financial statement for the fiscal year ending March 31, 2026. The tender offer period is scheduled from October 31, 2025, to December 15, 2025, with the share buyback in late March 2026.