MITSY » Topics » Affiliated Financial Corporation and BayQuest Capital Corporation

This excerpt taken from the MITSY 20-F filed Jul 17, 2009.

Affiliated Financial Corporation and BayQuest Capital Corporation

On April 27, 2007, Mitsui USA, a wholly owned subsidiary of the Company, agreed with the owner group of Affiliated Financial Corporation and BayQuest Capital Corporation (collectively “AFC”) to acquire 87.5% of the outstanding shares of AFC for ¥7,221 million (U.S. $63 million). After the closing conditions were met, Mitsui USA completed the acquisition on September 21, 2007. In the acquisition process, the owner group had Affiliated Financial Corporation and BayQuest Capital Corporation merge into newly formed LLCs, AFC LLC and BCC LLC, respectively; then Mitsui USA, through AFC HoldCo, LLC, a newly formed holding entity owned by Mitsui USA, acquired both AFC LLC and BCC LLC in exchange for cash and 12.5% of the LLC interest in AFC HoldCo, LLC on September 21, 2007. On the same day, BCC LLC was merged into AFC LLC, the surviving entity. After the series of transactions, Mitsui USA holds an 87.5% interest in AFC HoldCo, LLC.

AFC purchases, sells, securitizes and services retail automobile installment contracts originated by franchised and selected independent dealers in approximately 40 states in the United States. Through its loan purchases, AFC serves as a source of financing for more than 4,000 dealerships, providing financing to consumers indirectly.

The companies have considerable experience in automobile-related businesses worldwide, including logistics, assembly, distribution, dealerships, automotive parts and retail financing. This acquisition is intended to enhance the companies’ automobile value chain in the United States and is consistent with the companies’ core strategy.

The consolidated financial statements for the year ended March 31, 2008 include the operating results of AFC as a subsidiary from the closing date of the acquisition.

The purchase price was determined based on the expected future cash flows AFC will generate. The excess of the purchase price over the fair value of net assets of AFC was recorded as goodwill. The primary factors that contributed to the determination of the purchase price that caused the recognition of goodwill were following: (1) the AFC’s network and experience in the automobile financing business in the United States, (2) the synergies that might be achieved with the companies’ automobile value chain in the United States.

In connection with this acquisition, ¥277 million and ¥6,695 million were assigned to intangible assets subject to amortization and goodwill, respectively. The intangible assets subject to amortization consist of a non-compete agreement with an amortization period of 8 years. The goodwill is deductible for tax purpose and has been assigned to the Americas Segment.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

 

     Millions of Yen  

Current assets

   ¥ 3,105   

Property and equipment

     151   

Intangible assets

     6,972   

Investments and other assets

     6,403   
        

Total assets acquired

     16,631   
        

Current liabilities

     (2,064

Long-term liabilities

     (6,338

Minority interest

     (1,008
        

Total liabilities assumed and minority interest

     (9,410
        

Net assets acquired

   ¥ 7,221   
        

 

F-25


Table of Contents

Notes to Consolidated Financial Statements—(Continued)

Mitsui & Co., Ltd. and subsidiaries

 

Pro forma results of operations for the above business combination have not been presented because the effects were not material to the consolidated financial statements.

This excerpt taken from the MITSY 20-F filed Aug 4, 2008.

Affiliated Financial Corporation and BayQuest Capital Corporation

On April 27, 2007, Mitsui USA, a wholly owned subsidiary of the Company, agreed with the owner group of Affiliated Financial Corporation and BayQuest Capital Corporation (collectively, “AFC”) to acquire 87.5% of the outstanding shares of AFC for ¥7,221 million (U.S. $63 million). After the closing conditions were met, Mitsui USA completed the acquisition on September 21, 2007. In the acquisition process, the owner group had Affiliated Financial Corporation and BayQuest Capital Corporation merge into newly formed LLCs, AFC LLC and BCC LLC, respectively; then Mitsui USA, through AFC HoldCo, LLC, a newly formed holding entity owned by Mitsui USA, acquired both AFC LLC and BCC LLC in exchange for cash and 12.5% of the LLC interest in AFC HoldCo, LLC on September 21, 2007. On the same day, BCC LLC was merged into AFC LLC, the surviving entity. After the series of transactions, Mitsui USA holds an 87.5% interest in AFC HoldCo, LLC.

AFC purchases, sells, securitizes and services retail automobile installment contracts originated by franchised and selected independent dealers in approximately 40 states in the United States. Through its loan purchases, AFC serves as a source of financing for more than 4,000 dealerships, providing financing to consumers indirectly.

 

F-23


Table of Contents

Notes to Consolidated Financial Statements—(Continued)

Mitsui & Co., Ltd. and subsidiaries

 

The companies have considerable experience in automobile-related businesses worldwide, including logistics, assembly, distribution, dealerships, automotive parts and retail financing. This acquisition is intended to enhance the companies’ automobile value chain in the United States and is consistent with the companies’ core strategy.

The consolidated financial statements for the year ended March 31, 2008 include the operating results of AFC as a subsidiary from the closing date of the acquisition.

The purchase price was determined based on the expected future cash flows AFC will generate. The excess of the purchase price over the fair value of net assets of AFC was recorded as goodwill. The primary factors that contributed to the determination of the purchase price that caused the recognition of goodwill were following: (1) the AFC’s network and experience in the automobile financing business in the United States, (2) the synergies that might be achieved with the companies’ automobile value chain in the United States.

In connection with this acquisition, ¥277 million and ¥6,695 million were assigned to intangible assets subject to amortization and goodwill, respectively. The intangible assets subject to amortization consists of a non-compete agreement with an amortization period of 8 years. The goodwill is deductible for tax purpose and has been assigned to the Americas Segment.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

 

     Millions of Yen  

Current assets

   ¥ 3,105  

Property and equipment

     151  

Intangible assets

     6,972  

Investments and other assets

     6,403  
        

Total assets acquired

     16,631  
        

Current liabilities

     (2,064 )

Long-term liabilities

     (6,338 )

Minority interest

     (1,008 )
        

Total liabilities assumed and minority interest

     (9,410 )
        

Net assets acquired

   ¥ 7,221  
        

Pro forma results of operations for the above business combination have not been presented because the effects were not material to the consolidated financial statements.

This excerpt taken from the MITSY 6-K filed Dec 4, 2007.

Affiliated Financial Corporation and BayQuest Capital Corporation

On April 27, 2007, Mitsui & Co. (U.S.A), Inc. (“Mitsui U.S.A,”), a wholly owned subsidiary of the Company, agreed with the owner group of Affiliated Financial Corporation and BayQuest Capital Corporation (collectively “AFC”) to acquire 87.5% the outstanding shares of AFC for about ¥7,221 million ($63 million). After satisfying the closing conditions, Mitsui U.S.A. closed the acquisition process on September 21, 2007. AFC purchases, sells, securitizes and services retail automobile installment contracts originated by franchised and selected independent dealers in approximately 40 states. Through its loan purchases, AFC serves as a source of financing for more than 4,000 dealerships, providing financing to consumers indirectly.

The companies have considerable experience in automobile-related businesses worldwide, including logistics, assembly, distribution, dealerships, automotive parts and retail finance. This acquisition is intended to enhance the company’s automobile value chain in the U.S. and is consistent with the companies’ core strategy.

The consolidated financial statements for the period ended September 30, 2007 include the operating results of AFC as a subsidiary from the closing date of the acquisition.

The purchase price was determined based on the expected future cash flows AFC will generate.

Pro forma results of operations for the above business combination have not been presented because the effects were not material to the consolidated financial statements.

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