Posted on 20 Mar 2012
Nisshin Steel Co, the smallest of Japan’s five blast-furnace mills, and Nippon Metal Industry Co. agreed to merge and create a bigger stainless steel producer to compete with overseas rivals.
Nisshin Steel President Toshinori Miki will be president of the new company that will be created by Oct. 1, the two companies said today in a statement. Nisshin Steel shareholders will receive 0.1 share of the holding company for each share they own, while Nippon Metal shareholders will get 0.056 share, they said.
The domestic steelmakers announced they were in talks about a merger in November to gain pricing power and compete against larger international rivals. An aging population and a sluggish domestic economy have curbed demand for stainless steel used in kitchens and buildings, while the yen’s appreciation means Japanese-made steel is less competitive.
The merger will likely boost pretax profit from operations by 13 billion yen ($156 million) a year by March 2016, the statement said. Nisshin Steel and Nippon Metal together earned net income of 12.3 billion yen in the financial year ended March 31 2011 on sales of 638.5 billion yen.
The combined company will have 10 directors, eight executives from Nisshin Steel and two from Nippon Metal, the statement said. Nisshin Chairman Hideo Suzuki will become chairman of the holding company.
Nisshin Steel closed unchanged at 145 yen on the Tokyo Stock Exchange. Nippon Metal Industry traded at 76 yen, unchanged from March 16.
