Nippon-Sumitomo marriage to create world No 2 steelmaker | business | Hindustan Times
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Nippon-Sumitomo marriage to create world No 2 steelmaker

business Updated: Sep 23, 2011 03:27 IST
Yuko Inoue
Yuko Inoue
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Nippon Steel Corp and Sumitomo Metal Industries Ltd said on Thursday that stakeholders of Sumitomo would get 0.735 Nippon Steel shares for each Sumitomo share if they combine to create the world's No 2 steelmaker, in what would be Japan's biggest non-financial sector merger.

The ratio pegs the transaction at about $22.45 billion, including Sumitomo's net debt — trumping the $17.53 billion acquisition of Vodafone KK by Softbank in 2006.Getting together to grow

The new firm, to be called Nippon Steel & Sumitomo Metal Corp, would target global output of 60-70 million tonnes a year by accelerating overseas expansion, the two firms said.

The world's biggest steelmaker ArcelorMittal produced 90.6 million tonnes of crude steel in 2010.

"We'll aggressively expand into overseas markets," Shoji Muneoka, president of Nippon Steel, told reporters.

Nippon and Sumitomo said they were aiming for annual cost cuts of 120 billion yen ($1.6 billion) three years after the planned merger, scheduled for October 2012. The deal is subject to approval by watchdogs of Japan and 10 other countries, including China, the US and India.