OMRON Announces Plan to Spin Off Automotive Electronic Components Business

TOKYO — (BUSINESS WIRE) — July 30, 2009 Following a resolution at a board of directors meeting held today, OMRON Corporation (TOKYO:6645)(ADR: OMRNY) announced its intention to spin off its automotive electronic components business into a new company, to be established in April 2010, through a corporate split. Details will be announced following approval at the board of directors meeting scheduled for the second half of January 2010.

Because OMRON is establishing the new spin-off company independently, some disclosure items and other information have been omitted below.

1. Background and Purpose

OMRON has designated the period from February 2009 through March 2011 as a “revival stage” in which sweeping profit structure reform will be implemented throughout the entire Group. As part of this profit structure reform, OMRON will reorganize its business domains over the medium-term, focusing on its three control-based businesses (industrial automation, electronic components and automotive electronic components). The spin off of the automotive electronic components business is intended to improve profitability by allowing independent management of this unique business.

OMRON entered the automotive electronic components business in 1983. In 2003, after Omron instituted an internal company system, this division was reorganized as the Automotive Electronic Components (AEC) Company. OMRON worked to strengthen the burgeoning business, and sales increased rapidly on a global basis alongside the expansion of the automobile market.

The automobile industry is now feeling the effects of the global recession that began in the United States last year. With little hope of recovery in the short term and the future remaining unclear, alliances between automakers have accelerated, creating a spillover effect on suppliers of automotive systems and components. AEC sees the changes currently taking place within the global automobile industry as an opportunity to transform itself into a company that can respond quickly and boldly to change.

In recent years, there has been a shift in what consumers require from their vehicles, resulting in the increasing adoption of automotive electronics. As an independent company, AEC will build on OMRON’s core competence, sensing and control technology, and further strengthen the electronics technology and auto know-how and technology that it has cultivated to date. AEC will focus these strengths on electronic control systems used in automotive bodies and work to respond to increasingly sophisticated and complex customer needs. At the same time, it will take a proactive and agile approach in considering partnerships and collaboration with other companies in order to respond to customer needs as quickly as possible.

In consideration of the above, OMRON determined that independent management capable of understanding and responding to movements in the automobile industry was needed to further strengthen AEC.

2. Outline of Split

1) Timeline
Schedule finalized Second half of January 2010 (planned)
Plans approved at BOD meeting Second half of January 2010 (planned)
Split date (effective date) April 1, 2010 (planned)

OMRON has not yet determined which assets will be transferred to the new company or their value; however, as they are not expected to exceed one-fifth of OMRON’s total assets, OMRON will not seek shareholder approval for the split in accordance with Article 805 of the Corporate Law of Japan.

2) Method

This is a simple corporate split in which OMRON is the transferring company and the new company is the assuming company.

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