Nippon Steel and Sumitomo Metal Industries announced they reached basic agreement to merge the businesses and signed master integration agreement for merger in October 2012. The integrated company name is Nippon Steel & Sumitomo Metal Corporation. The new company tries to be the best steel maker with world leading capabilities in scale, cost, technology and customer service. The firm targets 60-70 million tonnes of annual output capacity while the firm targets more than 150 billion yen of synergy in 3 years after the merge. The firm targets more than 10% of return of sales.
Nippon Steel is the surviving company through the merger. Nippon Steel allocates 0.735 shares to each share of Sumitomo Metals. They will sign merger agreement in April 2012 and hold shareholders’ meeting for the merger. Through the merger, they try to consolidate their resources including world top class of technology. They plan to improve the efficiency of the domestic operations while they seek wider offshore business opportunities. They seek synergy in the operations while they expand cooperation with global alliance partners. They plan reorganize and expand the processing and sales operations in China, Southeast Asia, Brazil and India to follow growing demand. They eye potential integrated steel plant in Asia and Americas for the wider global business. They also improve the solution ability to offer better products and service for the customers while they integrate the research and development units for better technological advantage. They expect annualized 150 billion yen of better profitability through the synergy including better operation, better productivity, better cooperation between the works and better procurement. They expect more synergy when they start full scale information exchange depending antitrust authorities’ screening processes.