On February 2, Japan's largest steelmaker Nippon Steel Corporation and its smaller domestic rival Sumitomo Metal Industries revealed plans to proceed with a merger, announcing the commencement of talks on the issue with a targeted date of October 1, 2012 for completion of the merger. In their statements, the companies said that the merger would enable them to become more competitive in developing new products and technology in the energy and environment-related sectors, also helping to decrease costs and meet increasing steel demand in the emerging markets.
If realized, the project would make the new steelmaker the world's second-largest steel producer after Luxembourg-based steel titan ArcelorMittal. Nippon Steel expects sales of JPY 4.1 trillion ($50.2 billion) for the fiscal year ending in March, while Sumitomo Metal foresees sales of JPY 1.5 trillion.
No certainty in key details yet
Nippon Steel and Sumitomo Metal, which mutually hold minor stakes in each other, have an alliance in the area of semi-finished steel products.
The companies said that there was no decision so far on vital details, namely the merger ratio, the name of the new company and the structure of the management.
The companies said that, in addition to combining manufacturing sites, sales operations and research units, the improved capacity of the merged entity should be able to better meet the fast-changing needs of customers.
"The integrated company would establish a system for supplying a variety of products to customers in the world," the steelmakers indicated.