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March 9, 1999

NOTICE ON GOING PRIVATE OF THREE LISTED SUBSIDIARIES OF SONY CORPORATION

    Sony Corporation
    Nobuyuki Idei
    President and Representative Director
    (Code No.: 6758
    Tokyo Stock Exchange, First Section)
    Sony Music Entertainment (Japan) Inc.
    Shigeo Maruyama
    President and Representative Director
    (Code No.: 7930
    Tokyo Stock Exchange, Second Section)
    Sony Chemicals Corporation
    Hideyuki Kurita
    President and Representative Director
    (Code No.: 6746
    Tokyo Stock Exchange, Second Section)
    Sony Precision Technology Inc.
    Sumio Sano
    President and Representative Director
    (Code No.: 7710
    Tokyo Stock Exchange, Second Section)

    Notice is hereby given that Sony Corporation ("Sony") and each of Sony Music Entertainment (Japan) Inc. ("SMEJ"), Sony Chemicals Corporation ("SCC") and Sony Precision Technology Inc. ("SPT"), three listed subsidiaries of Sony, have agreed that each of such three subsidiaries should become a wholly-owned subsidiary of Sony.

    1. Purpose of going private

    These four companies have determined to restructure their group architecture in the Sony group of companies (the "Group") in order to establish systems and organizations which enable the Group to rapidly develop and provide competitive products and services responding to varied demands of customers, whereby the Group may improve its shareholders' value through the reinforcement of its profitability as a group. As a result, it has been determined that the three listed subsidiaries should strengthen their cooperative relationship with their parent company, Sony, in various fields and develop their comprehensive business strategies in a manner more closely to Sony, while Sony continues to respect the independence of each such subsidiary. Further, each subsidiary will be able to more rapidly perform their assigned role in the Group's overall strategies to be established hereafter, benefiting from going private. Accordingly, these subsidiaries are expected to establish more secure positions in their respective business fields.

    2. Method of going private

    It is scheduled that the listed subsidiaries will become wholly-owned subsidiaries of Sony on or about January 1, 2000 by utilizing the exchange offer procedures included in the Law amending the Commercial Code and other laws which are expected to be deliberated at the ordinary session of the Diet this year. However, if the exchange offer procedures are judged to be impractical taking into account the effective date of the amended Commercial Code and status of the related amendment to other laws and regulations, an alternative method (going private in the manner that each subsidiary establish a wholly-owned subsidiary, transfer its business to such new subsidiary, and then be merged into Sony) which is legal under the laws and regulations of Japan currently in effect, may be selected.

    The shareholders of each subsidiary will become shareholders of Sony by accepting the allotment of new shares to be issued by Sony when the exchange offer is made.

    3. Exchange ratio (or merger ratio)

    Sony and each subsidiary have respectively sought advice of Merrill Lynch Japan Incorporated (for Sony) and Morgan Stanley Japan Limited (for each subsidiary) in respect of the basis of the exchange ratio and have agreed to the following relevant ratios taking into consideration of such advice.Sony and each subsidiary have respectively sought advice of Merrill Lynch Japan Incorporated (for Sony) and Morgan Stanley Japan Limited (for each subsidiary) in respect of the basis of the exchange ratio and have agreed to the following relevant ratios taking into consideration of such advice.

    Any of the following exchange ratios (or merger ratios) may be amended upon mutual deliberation between Sony and the relevant subsidiary if any material change occurs in respect of conditions based upon which the relevant ratio is determined.

    Corporate Name Sony SMEJ SCC SPT
    Exchange ratio (merger ratio) 1 0.835 0.565 0.203
    • 1.Merrill Lynch Japan Incorporated has calculated the respective equity values of Sony and each of the foregoing subsidiaries (both on a consolidated basis) by utilizing the Discounted Cash Flow Analysis, the Publicly-Traded Comparable Companies Analysis and the Market Price Analysis, and calculated appropriate exchange ratios (or merger ratios) from the financial point of view based on the above calculated values by taking into account the analysis of financial impact which the proposed going private may have on Sony and the Comparable Transactions Analysis both in Japan and the United States of America.
    • 2.Morgan Stanley Japan Limited, Tokyo Branch has made analyses of fair values of shares of Sony and each subsidiary company, by using the Discounted Cash Flow Analysis, the Market Performance Analysis and the Comparable Companies Analysis, and formed its views as to the exchange ratios (or merger ratios) on the basis of such analyses, subject to certain factors and assumptions.

    4. Summary of Parties (as of September 30, 1998)

    Trade name Sony Corporation
    Kind of business Manufacture and sale of electronic and electrical machines and equipment
    Date of incorporation May 7, 1946
    Location of head office 7-35, Kitashinagawa 6-chome, Shinagawa-ku, Tokyo
    Representative Nobuyuki Idei, President and Representative Director
    Share capital 415,918 million yen
    Total number of shares issued and outstanding (par value) 410,272,370 shares (50yen)
    Shareholders' equity 1,606,535 million yen
    Total assets 3,141,747 million yen
    Date of settlement March 31
    Number of employees 21,296
    Major customers Affiliated manufacturing and sales companies in and outside Japan
    Major shareholders and shareholding ratio
    1. Moxley & Co. 5.0%
    2. The Chase Manhattan Bank, N.A. London 4.6%
    3. State Street Bank and Trust Company 4.3%
    4. The Mitsui Trust and Banking Company Limited 4.1%
    5. The Sakura Bank, Limited 3.3%
    Main banks The Sakura Bank, Limited
    The Bank of Tokyo-Mitsubishi, Ltd. and others
    Trade name Sony Music Entertainment (Japan) Inc.
    Kind of business Planning, production, manufacture and sale of music and visual software, etc.
    Date of incorporation March 1, 1968
    Location of head office 4, Ichigaya Tamachi 1-chome, Shinjuku-ku, Tokyo
    Representative Shigeo Maruyama, President and Representative Director
    Share capital 49,660 millionyen
    Total number of shares issued and outstanding (par value) 108,179,321 shares (50yen)
    Shareholders' equity 220,045 million yen
    Total assets 261,213 million yen
    Date of settlement March 31
    Number of employees 1,609
    Major customers Affiliated planning, production, manufacturing and sales companies in and outside Japan
    Major shareholders and shareholding ratio
    1. Sony Corporation 71.0%
    2. The Chase Manhattan Bank, N.A. London 1.7%
    3. The Toyo Trust and Banking Company, Limited 1.4%
    4. The Mitsubishi Trust and Banking Corporation 1.1%
    5. J.P. Morgan Trust Bank Limited (non-taxable account) 1.0%
    Main banks The Sakura Bank, Limited
    Trade name Sony Chemicals Corporation
    Kind of business Manufacture and sale of recording media, electrical parts and joint materials
    Date of incorporation March 5, 1962
    Location of head office 6-3, Nihonbashi Muromachi 1-chome, Chuo-ku, Tokyo
    Representative Hideyuki Kurita, President and Representative Director
    Share capital 5,480 million yen
    Total number of shares issued and outstanding (par value) 32,670,000 shares (50yen)
    Shareholders' equity 27,471 million yen
    Total assets 43,800 million yen
    Date of settlement March 31
    Number of employees 938
    Major customers Sony Corporation and overseas manufacturing and sales subsidiaries
    Major shareholders and shareholding ratio
    1. Sony Corporation 69.6%
    2. The Toyo Trust and Banking Company, Limited 2.6%
    3. The Sumitomo Trust and Banking Company, Limited 1.6%
    4. The Chuo Trust and Banking Company Limited (trust account) 1.5%
    5. The Mitsubishi Trust and Banking Corporation 1.4%
    Main banks The Sakura Bank, Limited
    The Bank of Tokyo-Mitsubishi, Ltd.
    Trade name Sony Precision Technology Inc.
    Kind of business Manufacture and sale of precise measuring machines and equipment, and precise recording machines and equipment
    Date of incorporation August 1, 1969
    Location of head office 9-17, Nishigotanda 3-chome, Shinagawa-ku, Tokyo
    Representative Sumio Sano, President and Representative Director
    Share capital 4,640 million yen
    Total number of shares issued and outstanding (par value) 19,500,000 shares (50yen)
    Shareholders' equity 16,702 million yen
    Total assets 20,263 million yen
    Date of settlement March 31
    Number of employees 449
    Major customers Sony Corporation
    Manufacturers of machine tools and industrial equipment
    Affiliated overseas sales companies
    Major shareholders and shareholding ratio
    1. Sony Corporation 69.2%
    2. The Chuo Trust and Banking Company Limited 1.6%
    3. Japan Securities Finance Company Limited 0.7%
    4. Sony Precision Technology Employee Stock Ownership Association 0.6%
    5. The Sakura Bank, Limited 0.5%
    Main banks The Sakura Bank, Limited
    The Bank of Tokyo-Mitsubishi, Ltd.

    Business result for the most recent three years
    (unit: millions of yen)

    Sony SMEJ
    Fiscal year ended on 1996/3/31 1997/3/31 1998/3/31 1996/3/31 1997/3/31 1998/3/31
    Net sales 1,930,998 2,169,885 2,406,423 114,547 103,095 114,896
    Ordinary profit 28,585 85,727 118,816 20,960 11,403 15,024
    Net income 29,145 39,707 76,356 11,484 6,816 7,886
    Net income per share (yen) 77.94 105.72 191.75 106.16 63.01 72.90
    Dividends per share (yen) 50 55 60 35 35 35
    Shareholders' equity per share (yen) 3,385.78 3,518.11 3,820.12 1,983.47 2,011.11 2,048.73
    SCC SPT
    Fiscal year ended on 1996/3/31 1997/3/31 1998/3/31 1996/3/31 1997/3/31 1998/3/31
    Net sales 33,100 33,293 37,079 11,268 12,479 13,087
    Ordinary profit 2,173 2,329 3,317 487 959 874
    Net income 1,119 1,136 1,858 474 946 835
    Net income per share (yen) 34.26 34.78 56.90 24.34 48.55 42.85
    Dividends per share (yen) 12 12 17.5 5 12 12
    Shareholders' equity per share (yen) 738.30 760.75 805.31 779.58 818.14 848.59

    Contact

    • Sony Corporation
      7-35, Kitashinagawa 6-chome,
      Shinagawa-ku, Tokyo
      Yoshimasa Chiba, General Manager of
      Capital Market and Investor Relations
      Tel: 03-5448-2654
    • Sony Music Entertainment (Japan) Inc.
      4, Ichigaya Tamachi 1-chome,
      Shinjuku-ku, Tokyo
      Hiroshi Kato, Director and Senior General
      Manager of Corporate Planning Group
      Tel: 03-3266-5995
    • Sony Chemicals Corporation
      6-3, Nihonbashi Muromachi 1-chome,
      Chuo-ku, Tokyo
      Isao Yawata, Director
      Tel: 03-3279-0444
    • Sony Precision Technology Inc.
      9-17, Nishigotanda 3-chome,
      Shinagawa-ku, Tokyo
      Sadao Takigawa, Director and General
      Manager of Accounting & Finance Division
      Tel: 03-3490-3151
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