DNP: To Integrate DX Capabilities via Absorption Merger of Digital Solutions Unit by 2027

DNP (headquartered in Shinjuku Ward, Tokyo; President: Yoshiaki Kitajima) resolved at its board meeting on Oct. 9 to restructure two companies. The main purpose is to adapt to changes in the business environment driven by the spread of generative AI and to create new value using digital technology. Specifically, DNP will absorb and dissolve wholly owned subsidiary DNP Digital Solutions (headquartered in Shinjuku Ward, capital: 100 million yen). Additionally, it will inherit the sales department of consolidated subsidiary DNP Planning Network (headquartered in Shinjuku Ward, capital: 50 million yen) through an absorption split. These two actions will be implemented on the same day to optimize group resources and further strengthen the DX base aimed at improving value provided to customers.

DNP Digital Solutions has supported the DX of the group, including the Smart Communication segment, by planning, developing, and maintaining information systems. On the other hand, DNP Planning Network handles promotional support in the travel and tourism fields. The latter is also scheduled to merge with DNP Communication Design on the same day, aiming for the integrated utilization of talent and know-how. This restructuring aims to enhance business competitiveness by speeding up decision-making and advancing transformation to an AI-driven development and operation process.

The impact of this merger and absorption split on the company's consolidated results is 'minor' according to disclosure materials. The scale can be compared with the following figures:

DNP Digital Solutions maintains a high operating profit margin of approximately 16.4% for the FY March 2026 period. Integrating its technical capabilities into the parent company is expected to stabilize the overall revenue structure and add value. Furthermore, inheriting the sales department of DNP Planning Network (sales of approx. 2.9 billion yen) will strengthen responsiveness to customer touchpoints in the marketing area.

The disappearance of a subsidiary through merger and the integration of business units into the parent company serve as a foundation for flattening the organization and realizing agile decision-making. In particular, there is a strong strategic intent to secure market advantage by shortening the cycle from customer issue resolution to implementation, as the system development department becomes directly linked with existing printing and communication businesses.

The implementation schedule for this restructuring is as follows. The merger agreement is scheduled to be concluded on Feb. 18, 2027, with the effective date set for April 1, 2027.

Notably, both procedures will use "simplified" methods. Since DNP Digital Solutions is a wholly owned subsidiary, and DNP Planning Network will become a wholly owned subsidiary by the effective date of the absorption split, both meet the requirements under the Companies Act. This exempts them from approval resolutions at the parent company's (DNP) shareholders meeting. Consequently, this aims to speed up the restructuring process and reduce procedural costs.

There will be no issuance of shares or delivery of money/other property associated with the merger, nor any allocation of shares or other property in the absorption split. There are no changes to the company name, head office location, representatives, capital, or fiscal year (March), ensuring continuous business operations. Thus, direct risks of increased capital costs or rights changes for shareholders are excluded, focusing instead on long-term enterprise value enhancement. Investors and employees will watch for productivity improvements from organizational change and their resulting financial impact.