KDDI CORPORATION – Annual report – 31 March 2017
4. Business Combinations
i. Overview of business combination
On January 31, 2017, the Company acquired all of the shares of special purpose entities (“BJHD2 and BJHD3”) that hold 100% of the shares of BIGLOBE Inc. (“BIGLOBE”) from Japan industrial Partners, Inc. and others. As a result, BIGLOBE and its consolidated subsidiaries became Company’s consolidated subsidiaries on the same date.
ii. Main objectives of business combination
Upon the acquisition, the Company and BIGLOBE will utilize their respective customer base, business expertise, and so forth to expand business through synergies between the two companies, not only in the telecommunications domain, but also in non-telecommunications domains such as settlement services and product sales business.
iii. Name and business description of the acquiree (as of March 31, 2017)
BJHD2 and BJHD3 are immediate holding companies which were founded to hold the shares of BIGLOBE.
iv. The proportion of acquired equity interest with voting rights
BJHD2 and BJHD3 100%
v. Acquisition date
January 31, 2017
vi. Consideration transferred and its components
¥321 million of acquisition-related costs for the business combination is recognized as selling, general and administrative expenses.
vii. Fair value of assets and liabilities, non-controlling interests and goodwill on the acquisition date
Consideration transferred is allocated to the acquired assets and assumed liabilities on the basis of fair value on the acquisition date.
Notes: 1. The analysis of Property, plant and equipment and intangible assets
The main components of property, plant and equipment are buildings and machinery. The main components of intangible assets are customer related assets, trademark and software.
2. Estimation of fair values of acquired receivables, contractual amounts receivables and amounts not expected to be collected
As for the fair value of ¥16,370 million (U.S.$146 million) of acquired receivables and other receivables, the total amount of contracts is ¥16,370 million (U.S.$146 million) and the estimate of the contractual cash flows not expected to be collected at the acquisition date is none.
Goodwill reflects excess earning power expected from the collective human resources related to the future business development and its synergy with the existing businesses. There is no item deductible from the taxable income related to the recognized goodwill.
viii. Consideration for expenditures due to the acquisition of control over the subsidiary
ix. Revenue and profit for the year of the acquiree
Revenue and profit for the year of the acquiree after the acquisition date, which are recorded on the consolidated statement of income for the year ended March 31, 2017 are ¥16,309 million (U.S.$145 million) and ¥987 million (U.S.$9 million), respectively.
x. Consolidated revenue and consolidated profit for the year assuming that the business combination was completed at the beginning of the fiscal year (Pro forma information)
Revenue and profit for the year in pro forma information (unaudited) related to the consolidated results, assuming that the acquisition of control by business combination was effective on April 1, 2016, are ¥4,798,650 million (U.S.$42,773 million) and ¥644,371 million (U.S.$5,744 million), respectively.