We are pleased to inform you that Daido Steel Co., Ltd. (President & CEO: Mr. Takeshi Ishiguro) and Daido Steel (Shanghai) Co., Ltd. (Chairman & CEO: Mr. Yasutoshi Yamauchi), a subsidiary of Daido Steel Co., Ltd., have signed an agreement with TimkenSteel Corporation (President & CEO: Mr. Michael S. Williams, Headquarters: Canton, Ohio, USA) regarding the purchase and sale of the registered capital (hereinafter referred to as the Transaction) of TimkenSteel (Shanghai) Corporation Ltd., a sales entity with technical support function in China (a local corporation: 100% owned by TimkenSteel Corporation).

1．Background of the Transaction

Daido Steel Co., Ltd. and TimkenSteel Corporation entered into an agreement in January of 2007 to initiate joint projects regarding manufacturing and supply of specialty steels. The joint projects were further developed into a commercial agreement (Project Hinoki) in September of 2009, to supply SBQ (special bar quality products designed for extremely tough applications) to customers who demand high quality products in the Chinese and east Asian markets.

As the world heads toward carbon neutrality, there will be some disruptive shifts in the industries that require our specialty steels, such as electrification in automotive industry and renewable energy in power generation. We expect our customer demand will not only continue to exist, but there will also be higher expectations from the customers of our SBQ products.

In this challenging environment, Daido Steel’s strategy of expanding sales of SBQ products and of strengthening of sales force for high alloys and specialty stainless steels in the Chinese market, and TimkenSteel’s strategy restructuring of the Asian business were perfectly aligned, and that eventually led to the signing of this agreement.

2．Purpose of the Transaction

By signing this agreement, Daido Steel is planning to further strengthen the joint work relationship with TimkenSteel, and is planning to achieve the following goals:

(1). Improving our supply chain of SBQ products and the customer support system

Daido Steel is aiming for uninterrupted supply of SBQ products, which were developed by TimkenSteel, produced by TimkenSteel and Daido Steel (mainly at Chita Plant) and designed for business expansion of our customers, and is building a customer support system to answer the ever increasing demands of our customers.

(2). Expanding our product line-up

Daido Steel is planning to add high performance materials such as high alloy materials and specialty stainless steels developed and made by Daido Steel (mainly at Shibukawa and Hoshizaki Plants).

(3). Providing better value to our customers

To provide sustainable high quality and stable supply chain to our customers by appropriately utilizing TimkenSteel’s proprietary technology and SCM know-how, together with Daido Steel’s manufacturing technology and quality assurance.

3．Summary of the company and the Transaction

(1). Summary of the company

(2). Summary of the Transaction

Through the Transaction, Daido Steel (Shanghai) Co., Ltd. will purchases the registered capital using its own funds. The corporate name of the entity will be changed by the application process immediately after the effective date of the Transaction.
Also, at the completion of the Transaction, Daido Steel and TimkenSteel will sign a new commercial agreement to design customers’ business growth.

(3). Dates

Agreement signing date: March 31, 2021
Effective date of the Transaction: July 8, 2021 (Planned)

4. Future Prospect

There will be no effect of the Transaction to the consolidated results of Daido Steel group ending March 31, 2021. Any effect to the consolidated results ending March 31, 2022 or later will be disclosed promptly as soon as the items to be disclosed emerged.

5. Changes in Sales Organizations of Daido Group in China (Changes: underlined parts)