Toshiba Tec Corporation (HQ: Shinagawa-ku, Tokyo; President & CEO: Hironobu Nishikori; Toshiba Tec)　and Digital Garage, Inc.（HQ: Shibuya-ku, Tokyo; Representative Director, President Executive Officer and Group CEO; Kaoru Hayashi, Digital Garage）have concluded a capital and business alliance agreement effective from December 23, 2021.

1.The background and objectives of the alliance

There is a growing demand for new values achieving the improvements of both consumers’ convenience and retailers’ productivity in the retail market where significant business environmental changes are taking place. Under such circumstance, Toshiba Tec is aiming to become a global top solutions partner, who is capable of solving customer issues with data utilization and providing values both inside and outside Japan by looking at the issues through the eyes of customers. In addition, Toshiba Tec is striving to provide new solutions in collaboration with partners with the aim of realization of efficient business operation through Digital Transformation（DX）by defining “Data service” focusing on purchase data, “Next generation stores”, “Payment” contributing to cashless society and “Supply Chain Management （SCM）”as 4 focused business domains.

As for the data service and payment areas, we believe that it is important for us to enhance payment services by utilizing FinTech to increase our competitive advantages and also to realize effective advertising appealing to each consumer by connecting purchase data which retailers possess with SNS through expansion of digital marketing which uses various digital technology, such as purchase data and SNS.

As one of Japan’s largest payment system providers handling over 3 trillion yen in annual payment transaction, Digital Garage provides a diversity of comprehensive payment platforms in the Financial Technology (FT) segment and aims to expand the amount of transaction by supporting payment to its investee companies and accelerating assistance of advertising, DX and CRM to its merchants under the new group strategy of “DG FinTech Shift” to integrate payments and data. The Digital Garage has a strength in developing digital marketing strategy in the Marketing Technology (MT) segment by offering seamless marketing solutions throughout the digital and the real world by promoting comprehensive digital marketing designed to merge digital and real and conducting digital marketing businesses with various data utilization.

Given the business policy of the two companies has high affinity, Toshiba Tec and DG financial Technology (formerly VeriTrans), a subsidiary of Digital Garage, established a joint venture, TD Payment Corporation (TDP) , in 2018. Since its establishment, TDP has been marketing and offering new multiple payment solutions for POS systems by utilizing FinTech.

For us to further drive the business development, we need to accelerate the business alliance by deploying more concrete initiatives. We believe that mutual exploitation of management resources, such as technologies and human resources engaging in the payment business and digital marketing domain, is very useful and we can increase corporate values by doing so. We have also come to the conclusion that we need to execute a capital tie-up to ensure the development and strengthening of long term cooperative relationship between the two companies.
Toshiba Tec and Digital Garage will continue to collaborate closely and take on challenges to create new solutions by promoting DX aggressively.

2.The outline of business alliance

(1)Payment business

1. Strengthen and expand payment services operated through TDP and other channels by integrating the payment services of Toshiba Tec and DG Financial Technology, Inc. through its optimization and efficiency.
2. Develop further collaboration in the payment service area by enhancing payment methods and strengthening sales channel and sales structure.
3. Establish more stable operation of payment center by working out the best cooperative framework and structure, in light of optimal resource allocation.

(2)Digital marketing service

1. Promote digital marketing service jointly in the retail business domain.
2. Promote comprehensive digital marketing, such as big data utilization including huge amount of payment data mentioned in the above (1) , development of sales promotion platforms and CRM, to be targeted for the retail media, such as cart POS, smartphone POS and digital signage, which Toshiba Tec is offering.

3.The outline of capital injection

Toshiba Tec will acquire 949,500 shares of Digital Garage’s common stock (2.0% of the total number of issued shares, which is equivalent to the total amount of approximately 4.62 billion yen) through the disposal of treasury stock for the third-party allocation to be conducted by Digital Garage. (1) Digital Garage will acquire 295,000 shares of Toshiba Tec’s common stock (0.5% of the total number of issued shares, which is equivalent to the total amount of approximately 1.35 billion yen) through the disposal of treasury stock for the third-party allocation to be conducted by Toshiba Tec. (2) Apart from this, Digital Garage is planning to acquire Toshiba Tec’s shares. (3) After the acquisition, the total amount of (2) and (3) will be nearly equivalent to (1).

4.Top messages from Toshiba Tec and Digital Garage

Hironobu Nishikori, President & CEO of Toshiba Tec Corporation
Toshiba Tec is aiming to become a global top solutions partner and is concentrating to create new solutions focused on the 4 business domains, namely, Data service, Next generation stores, Payment and SCM. To achieve the goal, I believe that it is extremely important to establish the partnership to practice our corporate philosophy – “Create with You”. While Toshiba Tec has been working very closely with Digital Garage and successfully generating synergy in the payment business area, we will step up efforts to contribute to the society by promoting further DX and implementing proactive initiatives in a speedy and aggressive manner through this capital and business alliance.

Kaoru Hayashi, DG Representative Director, President Executive Officer and Group CEO
Digital Garage is currently working on creating value-added businesses related to FT that will support Japan’s DX in various dimensions, under the Group strategy “DG FinTech Shift.” Digital Garage and Toshiba Tec, the largest POS company in Japan, have been collaborating through the joint venture TD Payment Corporation, which aims to provide payment services. Through this capital and business alliance, DG Financial Technology and Toshiba Tec together aim to integrate the functions of both companies’ payment services, and optimize various payment methods that are becoming increasingly complex. In the next- generation digital marketing business, both companies will utilize the most advanced technology while protecting personal information, with the aim of realizing 21st century retail tech.