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IR News - November 15, 2018

Tokyo, Japan - November 15, 2018

Yokogawa Electric Corporation
NKS Corporation

Yokogawa to Acquire All Shares of NKS Corporation, a Specialist in Validating Pharmaceutical and Food Product Facilities and Calibrating Measuring Instruments
- Boosting expansion of the life innovation business -

Yokogawa Electric Corporation (TOKYO: 6841) and NKS Corporation announce that Yokogawa will acquire all shares of NKS Corporation. NKS specializes in the validation of facilities for pharmaceuticals, medical equipment, and food products, and also the calibration of measuring instruments. The company possesses advanced technology and know-how in these fields, so adding NKS as a Group company will enable Yokogawa to expand the portfolio of solutions offered by its life innovation business. The acquisition is scheduled for December 3rd, 2018.

Background to the Acquisition

In the pharmaceutical and food industries, strict quality control is required to ensure the safety and efficacy of products, and it is crucial to validate whether manufacturing facilities and processes ensure the target quality. In the pharmaceutical industry, many countries have established respective good manufacturing practice (GMP*1) guidelines. Japan has joined the PIC/S*2 international arrangement for inspection and established its GMP in line with international standards. In the food industry, an increasing number of mostly Western countries require that aquatic foods and meats be processed in HACCP*3-certified facilities. In Japan, the HACCP standard is scheduled to be implemented in 2020.

As part of Yokogawa's Transformation 2020 mid-term business plan, the company aims to establish and grow the life innovation business, which covers various fields in the pharmaceutical and food industries from basic research through to logistics and service. Yokogawa offers imaging instruments for cell observation; drug discovery support systems for screening new drug candidates; control systems and field instruments for ensuring efficient production; and software packages for managing manufacturing and quality, and thus helps customers improve their productivity.

NKS is involved in validating facilities for pharmaceuticals, medical equipment, and food products, and calibrating measuring instruments. The firm has deep technical know-how in both fields with a solid track record of providing services to more than 7,000 sites. Regarding validation, NKS was the first firm in Japan to acquire ISO 9001 certification, and performs validation conforming to GMP and good distribution practice (GDP*4).

To achieve the companies' shared objective of expanding their respective businesses, NKS and Yokogawa have agreed that Yokogawa will acquire all shares of NKS.

Future Development

Yokogawa will add NKS's validation and calibration capabilities to the solutions of its life innovation business. By combining them with existing imaging instruments, control systems, and software packages for managing manufacturing and quality, Yokogawa will offer solutions not only for basic research, development, production, and logistics, but also for the operation of production facilities and instruments in the pharmaceutical and food industries. In addition, Yokogawa plans to leverage NKS's technology and knowledge to improve new solutions currently under development for cell-based manufacturing of medicine and biological contamination management.

Both companies aim to generate synergy early by combining Yokogawa's solutions for the whole value chain in the pharmaceutical and food industries, its customer base, and NKS's expertise in validation and calibration to develop business opportunities related to GDP and good laboratory practice (GLP*5).

*1 GMP: Management guidelines on the manufacturing of quality pharmaceutical and food products. A number of countries have established their own GMP guideline/rules.

*2 PIC/S (Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme): A non-binding, informal co-operative arrangement between regulatory authorities in the field of GMP of pharmaceutical products for human or veterinary use. PIC/C presently comprises more than 50 participating authorities from the Americas, Europe, and Asia.

*3 HACCP (Hazard Analysis Critical Control Point): This hygiene control approach aims to secure food safety by analyzing microorganism contamination and other hazards, identifying critical control points, and continuously monitoring the food manufacturing processes. This system was released by the Codex Alimentarius Commission, which is a joint organization of the UN Food and Agriculture Organization and World Health Organization, and is accepted internationally.

*4 GDP: This guideline is for ensuring the quality and integrity of pharmaceutical products, preventing their spillage, breakage, contamination and mix-ups, and securely delivering them to end users.

*5 GLP: This guideline is for ensuring the safety and appropriateness of facilities, procedures, organizations, and other factors in non-clinical research. The first GLP was introduced in the U.S., followed by the Organization for Economic Cooperation and Development. Many countries have established their own rules and guidelines.

Outline of NKS Corporation

Location: Nagoya, Aichi Prefecture, Japan
Representative director and president: Shigeki Matsuo
Founded: June 24, 1965
Capital: 50 million yen
Number of employees: Approx. 150
Offices: Head office and 12 regional offices in Japan
Business domain: Validation of facilities for pharmaceuticals, medical equipment, and food products. Calibration of measuring instruments

About Yokogawa

Founded in 1915, Yokogawa engages in broad-ranging activities in the areas of measurement, control, and information. The industrial automation business provides vital products, services, and solutions to a diverse range of process industries including oil, chemicals, natural gas, power, iron and steel, and pulp and paper. With the life innovation business the company aims to radically improve productivity across the pharmaceutical and food industry value chains. The test & measurement, aviation, and other businesses continue to provide essential instruments and equipment with industry-leading precision and reliability. Yokogawa co-innovates with its customers through a global network of 113 companies spanning 61 countries, generating US$3.8 billion in sales in FY2017. For more information, please visit www.yokogawa.com.

The names of corporations, organizations, products, services and logos herein are either registered trademarks or trademarks of Yokogawa Electric Corporation or their respective holders.