Hoya and Pentax Public Notice of Execution of Merger Agreement

JCN Newswires, Oct 30, 2007

Tokyo, Japan, Oct 30, 2007 - (JCN Newswire) - HOYA CORPORATION ("HOYA", TSE: 7741) and PENTAX Corporation, a consolidated subsidiary of HOYA, ("PENTAX", TSE: 7750) announce that we have entered into a merger agreement (the "Merger Agreement") with respect to a merger which will become effective on March 31, 2008 (as scheduled) (the "Merger"), in accordance with the resolutions adopted by the Boards of Directors of both companies at meetings held today.

1. Purpose of the Merger

(Purpose of the Merger)

On December 21, 2006, HOYA and PENTAX entered into a Basic Understanding Regarding Merger scheduled for October 1, 2007 (the "Basic Understanding"), in order to build a firm business structure by leveraging the managerial resources of the two companies in a mutually complementary manner, and to create synergies and accelerate business growth for the future. Thereafter, we held discussions aiming to enter into a merger agreement in early April 2007 but, considering various factors, we found that as a practical matter it would be difficult to achieve management integration through the merger scheduled for October 1, 2007 as contemplated in the Basic Understanding. Nevertheless, we still believed that the management integration of both companies would contribute to the increase of our corporate value, as mutually understood at the time of the execution of the Basic Understanding. As a result of our discussions, we reached an agreement on May 31, 2007 that HOYA would conduct a tender offer for all shares of PENTAX (the "Tender Offer") and that thereafter, HOYA would make PENTAX a wholly-owned subsidiary through a share exchange or other appropriate business reorganization transaction.

Based on the above-mentioned agreement, HOYA conducted the Tender Offer during the period from July 3, 2007 to August 6, 2007. As a result, HOYA holds 90.48% of the total outstanding shares of PENTAX (90.83% in terms of the ratio of voting rights), as of September 30, 2007.

Under the circumstances as described above, the manner of the management integration of HOYA and PENTAX was changed from a merger as initially contemplated to making PENTAX a wholly-owned subsidiary through a share exchange or other appropriate business reorganization transaction after the Tender Offer. However, we thought that it would be significant to demonstrate the mobility and flexibility of the management in order to strengthen the principle businesses of PENTAX. It is desirable for each business unit of PENTAX to be enabled to make management decisions and to take actions as promptly as the business units of HOYA do, and to appropriately allocate the management resources within the HOYA group taken as a whole, not within the small framework of a subsidiary. To that end, we reached a conclusion that the management integration through a merger as initially contemplated would be most appropriate. If PENTAX ceases to be a subsidiary of HOYA and is merged into HOYA, each business unit of PENTAX will become a part of HOYA's main body and we will be a flat organization. We believe that this will enable us to make flexible and prompt management decisions and to further growth in new areas through the appropriate allocation of resources. We will still keep the PENTAX brand after the Merger, in light of its importance and economic value.

(Reason for adopting a cash merger)

We have elected to distribute cash as consideration for the Merger rather than shares. As described above, the integration of the management of HOYA and PENTAX was conducted through HOYA's cash tender offer for all shares of PENTAX. As a result of our discussions after the Tender Offer, we concluded that it is appropriate from the perspective of the financial strategy of the company after the management integration and the fact that the Merger will be effected in a series of transactions involving the Tender Offer, aiming to integrate the management of both companies, to adopt a method for the Merger involving cash consideration (the "Merger Consideration"). By doing so, we can offer the shareholders of PENTAX who did not tender their shares in the Tender Offer an opportunity to exit their investment in PENTAX on similar terms, thereby avoiding any disadvantage due to any fluctuations in the market price of PENTAX shares.

(Delisting of PENTAX shares)

The Merger will be effected by PENTAX merging with and into HOYA, with HOYA as the surviving corporation. PENTAX shares will be assigned to the delisting post of the Tokyo Stock Exchange, Inc. (the "TSE") on October 30, 2007 and delisted on November 30, 2007, one (1) month thereafter. Once PENTAX shares are delisted, such shares will not be traded on the TSE. PENTAX shares will be still available to be traded in privately negotiated transactions until the effective date of the Merger after the delisting. However, the shareholders of PENTAX would be required to look for possible purchasers by themselves outside of the TSE, and it would be much more difficult than trading their shares at the TSE. It is expected that the tax treatment of the sale of PENTAX shares and the distribution of Merger Consideration might differ depending on whether such sale occurs before or after the delisting. PENTAX shareholders should consult their own tax advisors regarding the applicable tax treatment. The shareholders of PENTAX have the right to request PENTAX to purchase their shares pursuant to Articles 785 and 786 of the Companies Act within the period from the day twenty (20) days prior to the effective date of the Merger to the day immediately preceding the effective date. The purchase price of PENTAX shares will be determined by the requesting shareholder and PENTAX through their mutual discussion. If they fail to agree upon the purchase price and PENTAX or the requesting shareholder files an application for the determination of the purchase price with a competent court in accordance with the provisions of Article 786, Paragraph 2 of the Companies Act, the court will determine the price. Therefore, in the event that a request for purchase is made, PENTAX's purchase price for PENTAX shares might differ from the Merger Consideration. It is the responsibility of any shareholder wishing to make such a request to determine the procedures necessary for doing so.