July 1, 2005

Merger of Three Sales Companies in the
Medical Gases and Equipment Field

The managements of Taiyo Nippon Sanso Co., Ltd. (TNSC) and
Suzuki Shokan Co., Ltd. have agreed to merge two TNSC
subsidiaries with a subsidiary of Suzuki Shokan, all of
which are engaged in medical gases and equipment
businesses, effective October 1, 2005. The companies to be
merged are: 1) Ozawa Sanso K.K. (a wholly owned subsidiary
of TNSC); 2) Yamato Sanki K.K. (TNSC equity stake of 70%);
and 3) Suzusho Medical Co., Ltd. (Suzuki Shokan equity
stake of 85%).

Background to Merger Decision
Currently the aforementioned companies, all of which are
engaged in the sale of medical-use gases and equipment,
are suffering from a deterioration in their business
environment. Adverse factors include the government’s
consistent trend in recent years in lowering national
health insurance drug prices; the adoption by medical
institutions of a blanket remuneration system (under which
fixed-amount remuneration is paid according to the nature
of the patient’s illness); joint procurement by medical
institutions to pull down costs; and stricter screening of

the eligibility of medical treatment for reimbursement by
the health insurance system.
For these reasons, companies in this field,
particularly those operating on a small scale or in
restricted geographical areas, are experiencing rising
expenses simultaneously with a downward trend in selling
prices and a general worsening of delivery conditions.

To combat the difficult business conditions described
above and survive the current period of extremely stiff
competition, the three companies have hitherto taken a
number of steps to reform their business practices, but
they have found it impossible to draw up clear strategies
for long-term business expansion on their own, largely
because of their limited management resources.

For these reasons, the managements of the companies
and of their parent companies have judged, after a lengthy
examination of the firms’ business circumstances, that the
amalgamation of the three companies into one offers the
greatest chance of success.

Suzuki Shokan has for many years served as one of
TNSC’s most important sales agents for its industrial
gases, and the close and cordial relationship between the
two companies has been further strengthened through the
collaborative operation of joint ventures in the field of
hydrogen gas and helium gas as well as the manufacture of
cryogenic equipment.

Objectives of New Post-Merger Enterprise
1.

In view of the factors outlined above, following the
merger of the three companies, Taiyo Nippon Sanso and
Suzuki Shokan will work to effectively utilize the
synergy generated by the combination of the special
viewpoints and expertise of manufacturer and seller,
respectively, of medical gases and equipment. In doing
so, they will, hopefully, succeed in expanding their
geographical area of sales, put the business on a
sounder financial footing, and reinforce its earning
power.
2.

It is expected that the three merged companies will
pool their respective experience, specialized know-how,
and technological expertise to become an even more
effective sales company able to offer end-users a
higher quality of service and ensure the highest
possible product quality.
3.

Taken together, the three companies possess offices and
other facilities in the Tohoku and Kansai regions of
Japan, but there is a considerable amount of overlap in
the Kanto region. The merger will make it possible to
rationalize this infrastructure to produce greater
efficiency in marketing, product distribution, and
administration.

Combined Operational Scale of Companies to be Merged
Sales per annum: ¥5,330 million (as of end of March 2005)
Employees: 147
Annual sales target for FY2007: ¥7,000 million

Outline of New Company
Merger date: October 1, 2005
Name of new company: Nippon Megacare Corporation
Location of head office: Tokyo
Location of business facilities: Miyagi, Saitama, Chiba,
and Kanagawa prefectures, as well as Tokyo and Osaka
President: Mr. Masahiko Negishi
The appointment of other directors will be announced
at a later date.
Paid-in capital: ¥100 million