News Releases

At a meeting of the Board held February 24, 2011, directors approved the acquisition of am/pm Kansai Co., Ltd. ("am/pm Kansai") by merger, with FamilyMart Co., Ltd. ("the Company") as the surviving entity, and signed an agreement to that effect with am/pm Kansai.

The merger is scheduled to enter effect on April 1, 2011, after approval is obtained at an extraordinary meeting of shareholders of am/pm Kansai scheduled for late March 2011.

Certain items have been omitted from disclosure documents regarding this merger, since the increase in total assets of the listed company (FamilyMart) will be less than 10% of total equity, and the increase in sales will likewise stay below 3% of total sales, as of the final day of the fiscal year directly prior to the merger.

1. Purpose of the merger

The Company completed a merger with am/pm Japan Co., Ltd. on March 1, 2010, and is currently in the process of converting am/pm stores to the FamilyMart brand. Similar brand conversions are underway at am/pm stores located in the Kyushu area, following execution of a joint-area franchise agreement with JR KYUSHU RETAIL, INC. on July 9, 2010.

Through this policy, the Company will strengthen its franchise store platform mainly in the Kansai region, and further benefit from streamlining of management infrastructure by sharing operations in systems infrastructure, in addition to purchase of products and raw materials, and merchandise distribution. To this end, on January 7, 2011, FamilyMart signed a Letter of Agreement with Kappa Create Co., Ltd. ("Kappa Create") for absorption of the business operations of am/pm Kansai, which as of February 24, 2011 operated 122 stores. am/pm Kansai is a consolidated subsidiary of Kappa Create.

As a result of in-depth discussions among the parties, it was decided that FamilyMart would be the surviving entity after the merger, with incorporation of the am/pm Kansai store network as quickly as possible to achieve greater management efficiency and profitability.

As it did in other areas, the Company plans to convert am/pm stores in Kansai to the FamilyMart brand following the merger, with the agreement of all franchisees.

The Company is confident that this transaction will prove beneficial to both existing FamilyMart and am/pm franchisees, by leveraging the FamilyMart package including its nationwide store network which covers all 47 prefectures, well-established brand, IT infrastructure and product development, while strengthening their store network in Kansai. Collectively, this is expected to further enhance overall competitiveness.

Please note that the delay of about one month between our reporting this merger, on January 7, 2011, and the signing of the final agreement and fixing of the date for the acquisition, was due to the time required to complete procedures.

2. Overview of the merger

(1) Schedule

No general meeting of FamilyMart shareholders to discuss the merger is planned, since this is a simplified merger (kan'i gappei, "short form statutory merger") as provided by Article 796, Paragraph 3 of the Company Law of Japan.

(2) Merger method

The Company will take over am/pm Kansai with full management integration ("absorption-type merger"). am/pm Kansai will be fully absorbed.

Under the terms of the merger, the Company will pay a cash consideration for the shares of am/pm Kansai.

(3) Reason for paying a cash consideration

After in-depth discussions, it was decided that a merger through payment of a cash consideration would be more beneficial in terms of returns on capital invested by am/pm Kansai shareholders.

(4) Per share purchase price in the merger

The Company will pay \15,625 for each am/pm Kansai share (total payment: \2 billion)

(5) Issue of share subscription rights and bonds with equity warrants (in connection with reorganization of am/pm Kansai)

Not applicable, since am/pm Kansai did not issue any share subscription rights or bonds with equity warrants.

3. Calculation of share purchase price

To ensure the propriety of the merger transaction, calculation of the purchase price for am/pm Kansai shares has been entrusted to a third party organization, which adopted the discounted cash flow method.

The above terms were decided after due analysis of business performance, considering the Company's and am/pm Kansai's financial position, earnings trends and other key factors, after consultation and negotiation with all parties involved.

4. Overview of the two companies

5. Status after the merger

The status of the surviving entity will undergo no change.

6. Outlook

The expected impact of the merger on the consolidated earnings performance of the Company is insignificant.