Tender Offer

RNS Number:3196K
Kobe Steel Ld
24 April 2003

NEWS RELEASE

                                                                Kobe Steel, Ltd.

                                                   Tokyo Stock Exchange No. 5406





Tender offer of outstanding shares of Shinko Engineering





TOKYO (April 24, 2003) - Kobe Steel, Ltd. announces that it plans to
increase its equity share in the listed consolidated subsidiary Shinko
Engineering Co., Ltd. (stock exchange no. 6020) through a tender offer of its
outstanding shares.  This decision was reached at the Board of Directors meeting
held today.





1. Purpose of Tender Offer



The machinery segment of the Kobe Steel Group offers industrial plants,
environmental equipment, industrial machinery, internal combustion engines, and
heavy electrical equipment.  Due to the long slump in public works and
private-sector capital investment, profit levels have been low, and the Kobe
Steel Group has been striving to increase its profitability through structural
reforms.



A group company of Kobe Steel is Shinko Engineering whose main products consist
of internal combustion engines, speed changers, testing equipment, and
construction equipment.  Several products complement those of Kobe Steel and its
other group companies. Especially in cogeneration systems and continuous power
generation equipment, which are the main products of the internal combustion
engine business, lower electricity rates leading to low demand for power
generation equipment and intensified competition have crimped profitability.  In
response, Shinko Engineering has begun to reduce the number of its employees and
is implementing measures to improve operational efficiency and reduce costs.



The Kobe Steel Group recognizes the need to combine the strengths of its
companies, increase the synergies in the Group, and operate as one unified
enterprise.  In order to strengthen the management base of Shinko Engineering on
a consolidated basis, Kobe Steel has decided that increasing its equity share in
Shinko Engineering will enable Kobe Steel to integrate and more flexibly manage
Shinko Engineering.



After the tender offer, Kobe Steel plans private placements that would increase
the paid-in capital of Shinko Engineering by approximately 600 million yen.





2. Outline of Tender Offer



(1) Profile of Target Company

Name of company:              Shinko Engineering Co., Ltd.

Business activity:            Manufacture and sale of internal combustion
engines, speed                changers, construction equipment, and testing equipment

Established:                  January 25, 1950

Head office:                  Ogaki, Gifu Prefecture, Japan

President:                    Takashi Furuzono

Paid-in capital:              660 million yen

Issued shares:                13,200,000 shares



Major stockholders & their equity shares (as of September 30, 2002):

                               Kobe Steel, Ltd.  (45.7%)

                               Ogaki Kyoritsu Bank, Ltd.  (3.2%)

                               Shinsho Corporation (3.0%)



Recent financial highlights



Consolidated figures for fiscal years ending in March
(in millions of yen)
                                      March 2000               March 2001              March 2002
Sales                                   14,101                   17,321                  14,452
Ordinary income (loss)                   (520)                   (159)                    (196)
Net income (loss)                        (665)                   (235)                     196



Non-consolidated figures for fiscal years ending in March   
(in millions of yen)
                                     March 2000              March 2001                March 2002
Sales                                  12,795                  15,793                    12,562
Ordinary income (loss)                  (490)                   (197)                    (269)
Net income (loss)                       (584)                   (254)                     113



Relationship with Shinko Engineering

Capital:    Kobe Steel holds 45.7% of Shinko Engineering's issued shares.

Personnel:  One board director and two auditors of Shinko Engineering are from
Kobe Steel.

Business:   The two companies have a marketing tie-up for cogeneration systems.



(2) Type of shares to be offered:  Common stock



(3) Offer period:                  23 days from May 28, 2003 (Friday) to June
                                   19, 2003 (Tuesday)



(4) Offer price:                   51 yen per share



(5) Basis for calculating offer price:

Based on the average closing price of 38.02 yen for the three-month period from
January 24, 2003 to April 23, 2003, an offer price of 51 yen was derived.  (This
price includes a premium of 34.13%.)



(6) Targeted number of shares to be purchased:       5,844,400 shares

Potential excess shares to be purchased:             1,320,000 shares



(7) Change in number of shares

Number of shares before purchase:              6,035,600 shares  (45.7%)

Number of shares after purchase:               11,880,000 shares  (90.0%)



Notes:

1. The number of shares after purchase consists of the 5,844,400 shares to be
purchased.

2. In the event the extra 1,320,000 shares are purchased, the number of shares
held will be 13,200,000 shares (100% equity share).

3. The total number of shares issued by Shinko Engineering is 13,200,000.



(8) Date of public notice on start of offer period:    May 28, 2003



(9) Tender offer agent:             Daiwa Securities SMBC Co., Ltd.

                                    Daiwa Securities Co., Ltd. (subagent
                                    for Daiwa Securities SMBC)



(10) Funding for the offer:         365 million yen





3. Agreement for Tender Offer

The board of directors of Shinko Engineering are in agreement with the tender
offer.





4. Outlook

Depending on the results of the tender offer, Shinko Engineering could be
delisted from the stock exchanges where it is currently listed.



Following the closing of the tender offer, Kobe Steel intends to conduct private
placements.  Depending on the results, this could lead to a delisting of Shinko
Engineering.  Notification will be given on the private placements when details
have been finalized.





Media Contact:

Gary Tsuchida

Communication Center

Kobe Steel, Ltd.

9-12 Kita-Shinagawa 5-chome

Shinagawa-ku, Tokyo  141-8688

Japan

Tel [phone]

Fax [phone]

E-mail  [e-mail]



Investor Relations

Tel [phone]


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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