Osaka Steel to Make Tokyo Kohtetsu Total Subsidiary

Osaka Steel announced on Thursday the firm would make Tokyo Kohtetsu the total subsidiary by stock swap. The merger ratio will be 0.228 shares of Osaka Steel for each share of Tokyo Kohtetsu. Osaka Steel will apply 197,700 own stocks to shareholders of Tokyo Kohtetsu and issue 3.779988 stocks newly. Tokyo Kohtetsu will be delisted from JASDAQ market of Japan on March 27, 2006 and the stock swap will be carried out on March 30.Osaka Steel and Tokyo Kohtetsu regard shape steel as their main business fields. However, Japanese domestic shape steel market is in the shrinking trend due to the decline of construction demand and severe competition with cheaper imported products. Both firms decided the business reorganization in order to improve management basement to follow any fluctuations of market conditions and to keep continuous growth. Both firms will integrate production and sales operation around Tokyo and Osaka to utilize management resources and to establish more efficient production, sales and distribution systems.Nippon Steel Corporation will control Osaka Steel with 55.64% share after Osaka Steel makes Tokyo Kohtetsu the subsidiary, while Nippon Steel holds 60.62% share at present. Mitsui & Co., Ltd. will increase its control share against Osaka Steel from present 1.1% to 3.56%.