Nippon Steel, Sumitomo Metals, Kobe Steel to Expand Cross Shareholding

Nippon Steel, Sumitomo Metal Industries and Kobe Steel announced on Wednesday they expand the cross shareholding for further alliance activity. Nippon Steel and Sumitomo Metals purchase around 100 billion yen of additional share each while Nippon Steel and Kobe Steel and Sumitomo Metals and Kobe Steel purchase additional around 15 billion yen share each. Nippon Steel’s interest in Sumitomo Metals increases to 9.4%, which represents largest shareholder of Sumitomo Metals topping Sumitomo Corporation. Nippon Steel increases the interest in Sumitomo Metals from current 5.01% and in Kobe Steel from 2.05% to 3.4%. Sumitomo Metals also increases the share in Nippon Steel from current 1.81% to 4.1% and in Kobe Steel from 2.05% to 3.4%. Kobe Steel increases the share in Nippon Steel from 0.41% to 0.8% and in Sumitomo Metals from 1.71% to 2.4%. They already announced in October the additional cooperation including sharing expanded steel source at Wakayama works of Sumitomo Metals. Sumitomo Metals (Naoetsu) asks charge hot rolling of nickel series stainless steel to Yawata works of Nippon Steel starting in April-June 2008. Kobe Steel provides pellet technology to Nippon Steel while Nippon Steel provides sinter making technology to Kobe Steel. Sumitomo Metals asks OEM of stainless boiler tube for thermal power plant to Kobe Special Tube in April-June 2008. Vice president Kiichiroh Masuda said at press conference on the day the firm decided the additional share purchase for additional gain from the alliance. Nippon Steel expects more than 50 billion yen of annual profit from alliance with Sumitomo Metals and around 10 billion yen of gain from tie-up with Kobe Steel. Mr. Masuda also said the alliance including cross shareholding is important more than potential share price drop risk. He said the cross shareholding is not for defense against hostile takeover despite of the effect. He said they seek potential cooperation for offshore operations. Vice president Fumio Honbe of Sumitomo Metals said the additional share purchase meets economic gain from the additional alliance including sharing of steel source at Wakayama. He said the alliance is to improve their corporate value through actual cooperation activities. Vice president Keiji Koyama of Kobe Steel said the firm decided the additional share purchase value after study for potential profit from additional tie-up activities along with the current gain.