Medipal : Notice of Transfer of Subsidiary Business by Demerger (Simple Absorption-type Demerger)

February 14, 2017 MEDIPAL HOLDINGS CORPORATION

Representative: Shuichi Watanabe, Representative Director, President and CEO Code number: 7459 (1st Section, Tokyo Stock Exchange)

Contact: Mamoru Tsuchishio, Manager of Corporate Communications Department

Tel: +81-3-3517-5171

The Board of Directors of MEDIPAL HOLDINGS CORPORATION ("MEDIPAL") today resolved to conduct an absorption-type demerger of MEDICEO CORPORATION ("MEDICEO"), a wholly owned subsidiary of MEDIPAL, to transfer the business relating to MEDICEO's Information Systems Management Division ("the Business") to MEDIPAL on April 1, 2017.

As this demerger is a simple absorption-type demerger that will transfer the business of a wholly owned subsidiary to the parent company, certain items and details are omitted in this disclosure.

1. Purpose of the Demerger

   In the MEDIPAL Group, the Information Systems Management Division in charge of planning, development and operation of information systems was established at MEDICEO. As a result of this demerger, this division will be transferred to MEDIPAL. The purpose of this demerger is to strengthen governance in the MEDIPAL Group's information systems, and to facilitate smooth and rapid planning and development of information systems to support the diversification of the Group's business operations amid advances in information and communications technology (ICT).

2. Overview of the Demerger

3. Schedule

   February 14, 2017	Resolutions by the boards of directors of both companies
   February 14, 2017	Signing of the demerger agreement
   April 1, 2017	Scheduled date (effective date) of the demerger

   Note: The is a simple demerger pursuant to Article 796- 2 of the Companies Act for MEDIPAL, and a

   short-form demerger pursuant to Article 784-1 of the Companies Act for MEDICEO. Thus, the demerger will be conducted without obtaining the approval of a general meeting of shareholders of either company.

4. Demerger Method

   Simple absorption-type demerger in which MEDICEO is the splitting company and MEDIPAL is the succeeding company.

5. Allotments Related to the Demerger

   No shares or other assets will be allotted as a result of this demerger.

6. New Stock Acquisition Rights and Bonds with Warrants Associated with the Demerger None

7. Change in Capital Due to the Demerger

   There will be no change in the amount of MEDIPAL's capital as a result of the demerger.

8. Rights and Obligations to Be Transferred to MEDIPAL

   MEDIPAL will assume the assets, liabilities and contractual positions relating to the Business, as well as the accompanying rights and obligations. MEDIPAL will not take on MEDICEO employees engaged in the Business or their employment contracts and accompanying rights and obligations, nor will it assume the contractual positions and accompanying rights and obligations relating to the provision of services to MEDICEO's customers.

9. Prospects of Fulfilling Debt Obligations

   MEDIPAL judges that it will be able to fulfill its debt obligations in this demerger.

10. Overview of Companies Involved in the Demerger

    Succeeding Company	Splitting Company
    Name	MEDIPAL HOLDINGS CORPORATION	MEDICEO CORPORATION
    Location	2-7-15, Yaesu, Chuo-ku, Tokyo	2-7-15, Yaesu, Chuo-ku, Tokyo
    Name and position of representative	Shuichi Watanabe, Representative Director, President and CEO	Yasuhiro Choufuku, Representative Director, President and CEO
    Businesses	As a holding company, MEDIPAL HOLDINGS administers and supports the operating activities of companies in which it holds shares in the Prescription Pharmaceutical Wholesale Business, the Cosmetics, Daily Necessities and OTC Pharmaceutical Wholesale Business, and the Animal Health Products and Food Processing Raw Materials Wholesale Business, and conducts business development for the MEDIPAL Group.	Wholesale distribution of prescription pharmaceutical products, quasi drugs, reagents, medical equipment and other products
    Capital	¥22,398 million	¥100 million
    Established	May 6, 1923	April 1, 2004
    Total shares outstanding	244,524,496	1
    Fiscal year-end	March 31	March 31
    Major shareholders and percentage of shares held (As of September 30, 2016)	Takeda Pharmaceutical Company Limited 10.11% MEDICEO Employees Shareholders' Association of MP Group 3.45% Astellas Pharma Inc. 3.27%	MEDIPAL HOLDINGS CORPORATION 100.0%

    Financial Position and Business Results		Year ended March 31, 2016 (Consolidated)	Year ended March 31, 2016 (Nonconsolidated)
    Net assets	¥488,328 million	¥131,391 million
    Total assets	¥1,497,310 million	¥869,944 million
    Net assets per share	¥1,832.45	¥131,391 million
    Net sales	¥3,028,187 million	¥2,020,855 million
    Operating income	¥42,283 million	¥20,196 million
    Ordinary income	¥55,140 million	¥26,697 million
    Net income attributable to owners of the parent	¥30,771 million	¥16,722 million (Net income)
    Earnings per share	¥135.89	¥16,722 million

11. Overview of the Business to Be Transferred

12. Business of the division to be transferred

    Planning, development and operation of systems related to the prescription pharmaceutical wholesale business

13. Business results of the division to be transferred

    The division operates the information systems business within the MEDIPAL Group, and thus has no sales or profits.

14. Categories and amounts of assets and liabilities to be transferred (As of December 31, 2016)

    Assets		Liabilities
    Category	Amount	Category	Amount
    Current assets	¥153 million	Current liabilities	¥851 million
    Fixed assets	¥10,410 million	Long-term liabilities	¥14 million
    Total	¥10,563 million	Total	¥865 million

15. Status after the Demerger

    The demerger will not result in any change in the names, locations, names and positions of representatives, businesses, capital or fiscal year-end of MEDIPAL or of MEDICEO.

16. Outlook

The demerger is between MEDIPAL and its wholly owned subsidiary, and thus will not have any material effect on MEDIPAL's consolidated results.

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