Nippon Steel, Sumitomo Metal Agree to Merge

Nippon Steel Corp. and Sumitomo Metal Industries Ltd., both based in Japan but with a global footprint, have jointly announced an agreement to merge their businesses. The companies hope to have the merger complete by Oct. 1, 2012.

The goal of the integration would be to accelerate the combined companies’ global strategies and boost their global competitiveness in all business sectors.

By merging the two companies, Nippon and Sumitomo says that in addition to becoming a top global steel producer, combining their operation would allow the company to better respond to the needs of customers.

While the companies have implemented various measures to strengthen each company’s competitiveness since their initial alliance in 2002, both companies note there are a number of trends making it more challenging for existing steel mills. These challenges include the following:

Expansion of steel demand globally, especially in emerging countries;

Further increases in the need for higher quality steel, especially with new applications;

Commissioning of newly constructed steel mills and intensified competition in the steel supply markets globally; and

Globalization of steel consuming industries and the rapid, drastic changes in the markets for procuring raw materials for steel.

In announcing the plan, the two companies say that combining the domestic and overseas manufacturing sites and collaborating with their respective business partners would enable the integrated company to maintain a global system of production, marketing and sales and research and development activities throughout the world.

Furthermore, the combined company would seek and implement measures to reinforce and further expand its global manufacturing and supply system at a faster pace.