Announcement of Acquisition of CLUTCH Inc.
Announcement of Acquisition of CLUTCH Inc.
SHIFT Inc. (“SHIFT,” headquartered in Minato-ku, Tokyo, Japan; Masaru Tange, CEO and Representative Director) announced today that it has entered into a definitive agreement to acquire a 100% equity interest in CLUTCH Inc. (“CLUTCH,” headquartered in Minato-ku, Tokyo, Japan; Yuji Nakanishi, Representative Director), which is to be newly established and be spun off from Clutch Co., Ltd. (“Clutch,” headquartered in Minato-ku, Tokyo, Japan; Yasuhiro Sugiyama, Representative Director).
1. Reason for the acquisition
As SHIFT has been expanding its software quality assurance business since 2009, it has served clients in a wide variety of industries, such as financial, retail, logistics and entertainment. Moreover, toward the achievement of its growth strategy “SHIFT 1000,” which aims at ¥100 billion of net sales, SHIFT has been strategically acquiring businesses to expand and enrich its service portfolio. SHIFT has also shifted its branding policy from “SHIFT as a software testing company” to “SHIFT as a sellable service producer,” to realize ¥100 billion of net sales. As this new catchphrase indicates, SHIFT commits to bringing success to the businesses of its customers.
SHIFT foresees that the importance of design will significantly increase in terms of software engineering, as terms such as “UI/UX*” have been prevailing these days. For this reason, SHIFT realizes that more knowledge and know-how on UI/UX is required for its further growth. To accomplish SHIFT 1000 by committing to client success, SHIFT continues to expand and enrich its quality assurance services to address this growing importance of design.
This deal enables SHIFT to provide one-stop services as a web advertising agency from media buys to creating web sites and pages. SHIFT can now offer quality web marketing services and satisfy its clients, leveraging its strong connections with major advertisers.
CLUTCH, by joining SHIFT Group, will aspire even higher growth, leveraging SHIFT’s client base and talent acquisition capabilities. Furthermore, CLUTCH will build an even stronger organizational foundation.
* “UI/UX” is a set of words “User Interface” and “User Experience.” Web pages and applications with quality “UI/UX” generate high visual satisfaction for users and, thus, viewed as user-friendly
2. Overview of CLUTCH
| (1) Name | CLUTCH Inc. | |
| (2) Address | Shinagawa Station Building 10F-A, 4-23-5 Takanawa, Minato-ku, Tokyo | |
| (3) Name and title of representative | Yuji Nakanishi, Representative Director | |
| (4) Business | Web marketing | |
| (5) Capital stock | ¥1 million (Expected) | |
| (6) Founded | September 2020 (Expected) | |
| (7) Major shareholders and their shareholding ratio(s) | Clutch Co., Ltd. 100% | |
| (8) Relationship between SHIFT and CLUTCH | Capital relationship | No material capital relationship between SHIFT and CLUTCH, neither between SHIFT related party/company and CLUTCH related party/company. |
| Personnel relationship | No material personnel relationship between SHIFT and CLUTCH, neither between SHIFT related party/company and CLUTCH related party/company. | |
| Business relationship | No material business relationship between SHIFT and CLUTCH, neither between related SHIFT party/company and CLUTCH related party/company. | |
Note: The plan above is subject to change. The business to be spun off from Clutch to CLUTCH booked ¥1,969 million Revenues and ¥138 million Adjusted EBITDA for the fiscal year ended June 2020. ¥15 million assets are expected to be transferred from Clutch to CLUTCH.
3. Overview of Seller(s)
| (1) Name | Clutch Co., Ltd. | |
| (2) Address | Shinagawa Station Building 10F-A, 4-23-5 Takanawa, Minato-ku, Tokyo | |
| (3) Name and title of representative | Yasuhiro Sugiyama, Representative Director | |
| (4) Business | Web marketing and solution business (operating owned media, creating websites and developing web systems) | |
| (5) Capital stock | ¥16 million | |
| (6) Founded | February 2007 | |
| (7) Net assets | ¥266 million | |
| (8) Total assets | ¥885 million | |
| (9) Major shareholders and their shareholding ratio(s) | 4 of current and former board members and employees of Clutch: 100% | |
| (10) Relationship between SHIFT and existing Clutch | Capital relationship | No material capital relationship between SHIFT and Clutch, neither between related party and related company and Clutch related party and related company. |
| Personnel relationship | No material personnel relationship between SHIFT and Clutch, neither between related party and related company and Clutch a related party and related company. | |
| Business relationship | No material business relationship between SHIFT and Clutch, neither between related party and related company and Clutch related party and related company. | |
| Applicable situation | No material applicable situation between SHIFT and Clutch, neither of two parties will be regarded as related parties. | |
4. Number of shares to be acquired, acquisition price, and shareholdings before and after transaction
| (1) Number of shares held by SHIFT before the transfer | None (Number of voting rights: 0) (Percentage of voting rights held: 0.0%) |
| (2) Number of shares to be acquired by SHIFT | 100 shares (Number of voting rights: 1,000) |
| (3) Acquisition price*1 | ¥854 million including broker and due diligence fees, etc. (Estimated) |
| (4) Number of shares to be held by SHIFT after the transfer | 100 shares (Number of voting rights: 100) (Percentage of voting rights: 100%) |
Note *1: SHIFT has negotiated the aforementioned acquisition price based on a third party appraisal.
5. Schedule
| (1) Board resolution date | July 21, 2020 |
| (2) Execution date of share purchase agreement | August 11, 2020 |
| (3) Closing date | Late September, 2020 (Expected) |
Note: On July 21, 2020, the Board of Directors made a resolution that authorized its CEO/Representative Director to decide whether to make the aforementioned acquisitions assuming that major terms and conditions are within the range of those authorized by the Board of Directors.
6. Future outlook
SHIFT expects that this acquisition would have no material impact on its financial results and financial condition.
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Contact
Tomohiro Oka
Section Manager, Management Administration Division
ir_info@SHIFTinc.jp