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Nippon Steel to Acquire 20% Stake in Alliance Partner Topy Industries

10/01/2008 - Nippon Steel announces plans to purchase up to 20% of the voting shares of its alliance partner, Topy Industries Ltd.

Nippon Steel Corp. announced plans to purchase up to 20% of the voting shares of its alliance partner, Topy Industries Ltd. The company said the move would help to clarify Topy Industries’ position as a Nippon Steel Group company and increase the smooth and secure operation of the Alliance.
 
Topy Industries requested that Nippon Steel subscribe to new shares that it is offering through third-party private placement to raise funds for the installation of state-of-the-art equipment and work toward other objectives. As a result of subscribing to this issue, Nippon Steel will raise its ownership percentage from the current 7.5% to more than 15%, which is required for accounting for Topy Industries under the equity method. Nippon Steel will purchase additional shares in the stock market up to a total ownership share of 20%.
 
Topy Industries, a comprehensive metal processing manufacturer with top-level international market shares for transportation-related machinery products, will also purchase a certain amount of Nippon Steel shares.
 
The companies believe their alliance is likely to contribute to increasing the corporate value of both companies. As part of their ongoing alliance, the two companies have discussed and agreed on the following matters:
 
  1. Strengthening Topy Industries’ competitiveness through
    1. Renewal and expansion in the scale of its electric furnace and continuous casting equipment and the efficient joint use of steelmaking facilities.
    2. Transitioning to in-house production of billets for small steel bars (currently supplied to Topy Industries by Nippon Steel).
    3. Shipment of blooms produced by Topy’s state-of-the-art electric furnace and continuous rolling facilities to Nippon Steel.
  2. Implementation of measures to integrate manufacture from steelmaking to rolling of sections in cooperation with Topy Industries, which has internationally top-class processing technology for deformed section steel.
    1. Expansion of integrated subcontracted work, from Nippon Steel to Topy Industries, from steel-making to rolling of section steel
  3. Implementation of individual alliance measures related to the steel business:
    1. Substantially strengthening joint development initiatives related to Topy Industries’ automotive wheels and Nippon Steel’s high-tensile strength steel sheets and continued stable supply from Nippon Steel of steel sheets for automotive wheel manufacturing.
    2. Continuing the stable supply of specialty steel bars from Nippon Steel to Topy Industries for manufacturing undercarriage components for construction machinery.
    3. Continuing the stable supply of heavy and medium steel plates and H-beams from Nippon Steel to Topy Industries for use in bridge construction.
    4. Considering and implementing joint responses to capture demand for section steel in China, the ASEAN region, and elsewhere.
  4. Joint consideration of electric furnace dust recycling in the central Japan region.