News Release Lawson Merges Two Subsidiary Companies

NEWS RELEASE

TOKYO, JAPAN, 5 31, 2011

LAWSON,INC. ("LAWSON") announced that its board of directors today resolved to merge two subsidiaries, LAWSON ENTERMEDIA, INC. ("LEM") and HMV Japan K.K. ("HMV") on September 1, 2011, as follows:


1. Purpose of merger

LAWSON found the entertainment business to be an important growth area providing happiness to our customers, in line with our corporate philosophy, "Happiness and Harmony in our Community."

In this business area, LAWSON made LEM, an entertainment ticket seller, into a wholly-owned subsidiary by exchange of shares and encouraged LEM's restructuring and improvement of contents in the entertainment area during fiscal 2010. In addition, LAWSON acquired full ownership of HMV which sells CDs and DVDs, on December 1, 2010, with the aim of establishing highly convenient services that integrate real store and Internet channel.

As LEM has rebuilt its business base and administrative structure and has become well prepared for strategic development for a new growth stage, LAWSON has decided to merge LEM with HMV, for strengthening entertainment and e-commerce business through pursuit of group synergy.

With this merger, LAWSON will aim to grow further by expanding a unique entertainment business of handling concert tickets as well as CDs, DVDs, and other goods as merchandise.

With regard to HMV's store and e-commerce operations, the brand name will remain unchanged as "HMV," as it is a popular brand name among customers, worth for promoting effective use.


2. Outline of merger

(1) Merger schedule

LEM's board of directors meeting to approve merger agreement:May 31, 2011
HMV's General Meeting of Shareholders to approve merger agreement:May 31, 2011
Signing of merger agreement:May 31, 2011
Effective date of merger:September 1, 2011

Based on the provision of Article 796 Paragraph 3 of the Company Act of Japan, the merger will be completed as a short-form merger that does not require approval of LEM's General Meeting of Shareholders.

(2) Method of merger
The merger will be an absorption-type merger, with LEM as the surviving company.

(3) Merger ratio
As both merging companies are LAWSON's wholly-owned subsidiaries, merger ratios will not be determined. In addition, there will be no issuance of new shares.

(4) Overview of accounting procedure
In accordance with the accounting standards for business combinations, the merger will be treated as a transaction under common control.


3. Outlines of the parties involved in the merger

Corporate name

LAWSON ENTERMEDIA INC. (surviving company)

HMV Japan K.K. (company to be absorbed)

Representative

Ken Sakamoto, President and Representative Director ※1

Masaharu Kamo, President and Representative Director

Location of head office

1-11-2 Osaki, Shinagawa-ku, Tokyo

3-5-27 Roppongi, Minato-ku, Tokyo

Established

July 23, 1992

February 28, 1990

Major business activities

  • Sale of tickets
  • Information providing services
  • Other

To sell CDs, DVDs, Goods etc. at stores and E-commerce

Fiscal year end

February

April

Capital

¥2,892 million

¥2,953 million

Number of employees

273

732

Major Offices

Tokyo, Sapporo, Sendai, Nagoya, Osaka, Hiroshima, Fukuoka

Tokyo head office, 31 stores nationwide, one distribution center (Tokyo)

Shareholder

LAWSON,INC.100%

LAWSON,INC.100%

(as of February 28, 2011)

(as of April 30, 2011)

※1 Be appointed Representative Director, President at Board of Directors' Meeting on May 31, 2011.



4. Outline of surviving company (after the merger)

Corporate name

LAWSON HMV Entertainment, inc. (provisional)

Representative

Ken Sakamoto, President and Representative Director Masaharu Kamo, Representative Director

Location of head office

1-11-2 Osaki, Shinagawa-ku, Tokyo

Major business activities

  • Sale of tickets
  • To sell CDs, DVDs, Goods etc. at stores and E-commerce
  • Information providing services
  • Other

Fiscal year end

February

Shareholder

LAWSON,INC. 100%



5. Impact on business results

Impact on business results will be minor as this is a merger of consolidated subsidiaries.

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