Nippon Steel, Sumitomo Metal to Commence Consideration of Business Integration
02/04/2011 - Nippon Steel Corp. and Sumitomo Metal Industries, Ltd. have jointly announced that they will commence consideration of the integration of their entire businesses, targeted for October 1, 2012.
Nippon Steel Corp. and Sumitomo Metal Industries, Ltd. have jointly announced that they have agreed to commence consideration of the integration of their entire businesses, targeted for October 1, 2012. The companies will, with the spirit of their relationship being based on equality, proceed to consider the Business Integration.
The companies would, through the Business Integration, accelerate their global strategies and realize a level of competitiveness that is globally outstanding in all aspects, including technology, quality, and cost, by combining their respective resources that each has built up. By implementing these measures, the companies, in the midst of drastic changes to the overall business environment, aim to become a truly world-leading comprehensive steel manufacturer. In addition, through the Business Integration, the companies aim to better respond to the needs of customers both in Japan and overseas and desire to contribute to further development of the Japanese and global economy and improvement of global society.
The two companies have implemented various measures to strengthen each company’s competitiveness since their alliance commenced in 2002, such as the mutual supply of semi-finished steel products and business consolidation of their respective subsidiaries. These measures have produced excellent results. Nevertheless, confronted with the changes in the business environment surrounding the steel industry, the companies have come to believe that it is crucial to further strengthen their mutual relationship.
The new, integrated company that would be created by the Business Integration would endeavor to realize the following goals, aiming at becoming a world-leading comprehensive steel manufacturer.
1. Promoting and Accelerating the Global Strategies — Establish a system for supplying a variety of products to customers worldwide through the assembly of the companies’ and their group companies’ respective technologies, manufacturing bases, products that they are strong at, and their sales networks, and by maximizing the synergies of such assembly. The integrated company would maintain a global system of production, marketing and sales, and R&D activities. The integrated company would also seek to reinforce and further expand its global manufacturing and supply system at a faster pace.
2. Maintaining the World’s Most Advanced Technology — Through the integration of technology and R&D activities, the integrated company would maximize the potential of steel as a material and ensure that its technologies in the relevant area are always the most advanced, positioning it to be responsive to customer needs. The integrated company would further enhance its capabilities to offer comprehensive proposals to customers, combining proposals relating to both steel and non-steel businesses, and would promote further improvement of its technological infrastructure by modernizing its facilities and enhancing the level of technology.
3. Securing Cost Competitiveness in Global Competition — The integrated company would pursue greater efficiency and reinforcement of its manufacturing bases by integrating their manufacturing capabilities, implementing measures to strengthen its organization, including innovation of manufacturing processes, and concentrating and re-organizing resources.
4. Reinforcing Business Infrastructure of Non-Steel Segments — The integrated company would seek to produce synergies and strengthen its competitiveness for non-steel business segments, such as engineering, urban development, chemicals, new materials and system solutions, by enhancing its business infrastructure and further improving its comprehensive capabilities to offer business solutions to customers, and assembling proposals relating to both steel and other business segments.
5. Maximizing Corporate Value and Improving Evaluation from Shareholders and Capital Markets — By implementing the foregoing measures, the integrated company would seek to maximize its corporate value and obtain a high evaluation from shareholders and capital markets by further improving its profitability, promoting the strategic utilization of funds and assets, and building up a stronger financial base.
6. Aggregation of Resources — The integrated company would work toward the earliest accomplishment of the above goals by strongly promoting unification of all employees and aggregating the resources of the companies, while also taking into due consideration closer cooperation with local communities.
The companies plan to proceed with the plan for the Business Integration in which they would form a business holding company by way of a merger, with October 1, 2012 as the effective date of the merger. Such plan will be subject to approval by the companies’ respective shareholders and the relevant authorities.
The Companies plan to execute a merger agreement targeted for April 2012 at the latest and hold shareholders’ meetings to approve the merger agreement as soon as possible but no later than at their annual ordinary shareholders’ meetings held in June 2012.
Company name, headquarters, representative director(s), officers, and other such details are to be determined after consultation between the companies. The integration ratio (i.e., the ratio of the share allotment upon the merger) will also be determined upon consultation between the Companies based on an assessment by external institutions.
An “Integration Study Committee” co-chaired by the Presidents of both companies will be organized and it will commence consideration of the Business Integration.
