Notice concerning Disposal, Repurchase and Cancellation of Treasury Stock to Support Mori Manufacturing Research and Technology Foundation’s Social Contribution Activities (PDF: 119 kB)

To whom it may concern

January 13, 2017

Company DMG MORI CO. LTD.

Name

Representative Masahiko Mori

Representative Director and President

(Securities Code: 6141 Tokyo Stock Exchange, First Section)

Contact Hirotake Kobayashi Senior Managing Director, Accounting / Finance HQ Executive Officer

(Tel: [phone])

Notice concerning Disposal, Repurchase and Cancellation of Treasury Stock to Support Mori Manufacturing Research and Technology Foundation's Social Contribution Activities

(This is an English translation of the captioned release. This translation is prepared and provided for the purpose of the reader's convenience. All readers are recommended to refer to the original

version in Japanese of the release for complete information.)

DMG MORI CO. LTD. (hereinafter "the Company") hereby provides notice that following discussion and approval of a basic policy at a Board of Directors meeting on January 10, 2017, the Board of Directors has passed a resolution in a meeting on January 13, 2017, pursuant to Article 370 of the Companies Act of Japan (resolutions based on documents in lieu of resolutions by the Board of Directors) to dispose of the treasury stock by way of third-party allotment, to repurchase our stock pursuant to Article 156 of the same act, as applied pursuant to paragraph 3, Article 165 of the same act, and to cancel our treasury stock pursuant to Article 178 of the same act by which the Company supports social contributions of Mori Manufacturing Research and Technology Foundation (hereafter "the Foundation").

The disposition of our treasury stock is subject to the approval at the Company's 69th annual shareholders meeting to be held in March 2017, and the repurchase of our stock and cancellation of our treasury stock is subject to the approval of the disposition of our treasury stock at the shareholders meeting.

1. About Mori Manufacturing Research and Technology Foundation

2. Aim of the Foundation

   The Foundation's aims are to contribute to advancement of the machine tool industry and protection of the global environment through improving and innovating technology related to machine tools in such areas as machine tool technology, machining technology, intelligent technology, network technology, HMI (Human Machine Interface) technology, and environmental protection technology. The Foundation pursues such aims through support activities for R&D and human resource development related to machine tool technology. In addition to these efforts, the Foundation also carries out support activities related to the construction of cultural environments in local regions.

3. Summary of the Foundation

   ①	Name	Mori Manufacturing Research and Technology Foundation (General Incorporated Foundation)
   ②	Location	2-35-16, Meieki, Nakamura, Nagoya, Aichi
   ③	Administrative Director	Masahiko Mori
   ④	Activities	Support activities for R&D and human resource development related to machine tool technology and support activities related to constructing cultural environments in local regions
   ⑤	Resource for business	Approximately 100 million JPY per year (Note) Activities of the foundation from establishment until present have been funded from donations of 76 million jpy and will be additionally funded from funds received as the beneficiary of the trust that will receive the treasury stock to be disposed as described in 2. (1) below.
   ⑥	Date of establishment	March 18, 2016
   ⑦ Relationship with the Company
   Capital relationship	The Company is the donor of the fundamental property of the Foundation
   Personnel relationship	One representative director of the Company is concurrently an administrative Director of the Foundation. Also, one representative director of the Company is concurrently a member of the Foundation's Board of Directors. One employee of the Company is concurrently an auditor of the Foundation.
   Business relationship	The company has offered donations to the Foundation.
   Relationship with related parties	No applicable relationship exists

4. About disposition of treasury shares

5. Overview of Disposition

   ①	Disposal quantity	3,500,000 common shares
   ②	Disposal value	1 JPY per share
   ③	Amount of funds raised	3,500,000 JPY
   ④	Subscription or disposal method	Disposition by way of third-party allotment
   ⑤	Trustee (planned)	Japan Trustee Services Bank, Ltd. (sub-trustee, with Sumitomo Mitsui Trust Bank, Limited as trustee)
   ⑥	Disposal date	To be decided
   ⑦	Others	The disposition of the treasury shares is conditional on the special resolution regarding advantageous placement at the Company's 69th annual meeting of shareholders that will be held in March 2017. The disposal date or other matters will be decided at the meeting of the Board of Directors after the annual meeting.

6. Purpose and reason for disposition

   As part of social contribution activities carried out until now, the Company has worked to strengthen its cooperative relationship with the industry, government agencies, and research institutions such as universities by lending and donating machine tools in Japan and across the globe to be a facilitator of

   practical research activities, and establishing and donating scholarship funds to train excellent engineers from Japan and abroad. These activities are highly beneficial for the development of new technologies today. In addition, the Company has been carrying out support activities related to constructing cultural environments in local regions, particularly in Nara Prefecture and Iga City, Mie Prefecture, which are home to the Company's operational bases.

   The Foundation was established in order to take over the social contribution activities previously conducted by the Company and, working to stably promote such activities on a certain scale, it is continuing to conduct such activities to this day.

   The Company believes that by continually carrying out these support activities to improve and innovate technologies related to machine tools, now and into the future, it is contributing to the advancement of the machine tool industry as a whole, and by extension, providing a stronger base upon which the Company can grow sustainably for years to come. The Company also believes that by supporting the development of human resources through establishing a network of connections with research organizations, globally, it is contributing to not only the Company, but also the advancement of the global industry, including emerging countries. Furthermore, the Company believes that by supporting the construction of cultural environments in the local regions that are home to the Company's production bases, it is strengthening the Company's cooperation with the local society, further deepening its trustworthiness as a company, as well as improving employee morale and contributing to a smoother, more stable business operation.

   For such reasons, the Company considers that above-mentioned social contribution activities conducted through the Foundation will contribute to its future business development and enhance its corporate value. To support the Foundation's activities, the Company will establish a trust (hereinafter "the Trust") with Sumitomo Mitsui Trust Bank, Limited as trustee, Japan Trustee Services Bank, Ltd. as sub-trustee and the Foundation as beneficiary. The Trust will subscribe to purchase shares of our stock. The Trust will pay trust proceeds earned from dividends on our stock to the Foundation, and the Foundation will fund its activities

   based on such trust proceeds.

   The disposition of our treasury stock will be made to the Trust, which is being established to provide funding for activities of the Foundation.

7. Amount, use, and anticipated time of spending, of funds raised

   ① Amount of funds raised

   1) Total paid amount	3,500,000 JPY
   2) Estimated cost of issuance	0 JPY
   3) Estimated net proceeds	3,500,000 JPY

   ② Specific use of funds raised

   The estimated net proceeds above are planned to be appropriated in around April 2017 for expenses, such as attorney's fees, which are necessary for building the plan (disposition of treasury stock by way of third-party allotment).

8. Perspective on reasonableness of use of funds

   The funds raised will be appropriated for expenses, such as attorney's fees, which are necessary for the consideration of building the plan. These expenses are indispensable for building the plan, thus such use of the funds is considered reasonable.

9. Reasonableness of disposal terms

   ① Basis of calculation of paid amount and its specific details

   The Foundation plans on continually carrying out support activities for R&D and human resource development related to machine tool technology and support activities related to constructing cultural environments in local regions. The disposition of treasury stock is for the purpose of funding the activities of the Foundation, and the amount of proceeds will be allocated to the costs relating to the

   establishment of the Foundation as described in (3) ② above. Therefore, we believe that the price of

   disposition of 1 JPY per share is reasonable. In addition, since the disposition of treasury stock qualifies as an offering at a favorable price to the Foundation, the disposition is subject to the special resolution at the Company's 69th annual shareholders meeting to be held in March 2017.

   ② Basis for determining that number of shares to be issued and scale of dilution of shares are reasonable

   Social contribution activities currently done by the Foundation were conducted by the Company before the Foundation was established. We believe that the number of shares to be disposed, which will fund the activities of the Foundation, is at a reasonable size based on past activities record. Moreover, since, under the structure of the Trust, it is not currently expected that large amounts of the treasury stock to be disposed will be sold into the market, and thus the impact on the secondary market triggered by the disposition of treasury stock will be small, we believe that the number of shares to be disposed is at a reasonable level.

   In addition to the above, the extent of dilution of our shares triggered by the disposition of treasury stock is representing 2.63% (rounded to the second decimal place; 2.92% when calculation uses the total number of voting rights as of September 30, 2016, 1,199,785 rights) of the total number of issued shares, however we plan to implement measures to avoid the dilution of our shares, namely the repurchasing shares of our common stock in same number as the number of treasury stock to be disposed (subject to the approval of the disposition of treasury stock at the Company's 69th annual shareholders meeting to be held in March 2017) as described under "3. Repurchase of stock" below, therefore we determined that the extent of dilution of shares will be reasonable.

10. Reasons of selection a subscriber, etc.

    ① Summary of the planned subscriber

11. Name: Japan Trustee Services Bank, Ltd.

    (as sub-trustee of the Trust, will accept the allotment of shares as trust assets of the Trust)

12. Outline of trust agreement

Settlor	DMG MORI CO. LTD.
Trustee	Sumitomo Mitsui Trust Bank, Limited Japan Trustee Services Bank, Ltd. will be a sub-trustee under this trust agreement.
Beneficiary	Mori Manufacturing Research and Technology Foundation (General Incorporated Foundation)
Date of agreement	To be decided
Term of trust	To be decided
Purpose of trust	To put into effect social contribution activities by delivering dividends on the common shares of the trustee to the beneficiary as trust proceeds.

Note: Details of the trust agreement to be executed between the Company and Sumitomo Mitsui Trust Bank, Limited as trustee will be determined in the future.