Suzuki Metal Industry, Sumitomo Electric to Combine Stainless Wire Units

Suzuki Metal Industry, in which Nippon Steel has 22% interest, and Sumitomo Electric Steel Wire, which is wholly owned subsidiary of Sumitomo Electric Industries, announced on Tuesday they reached basic agreement to establish new firm to combine their stainless steel wire business. They continue the talk for detail and plan to integrate the business in April 2007. The combination company is comparable to the largest stainless wire maker, Nippon Seisen.They split off each stainless wire business to combine and seek synergy including integration of facilities. They also improve the competitiveness in cost, quality and products development ability for the value chain from the wire rod maker, Nippon Steel & Sumikin Stainless Steel to processing. They combine the business including Suzuki Metal Industry’s stainless business and 86% owned subsidiary in Yamaguchi and Sumitomo Electric’s Chinese subsidiary, Sumiden Wire Products (Guangzhou).Suzuki Metal Industry controls 60% of the Marunouchi, Tokyo based new firm with 40% share by Sumitomo Electric Steel Wire. The new firm’s capital will be less than 500 million yen. Suzuki Metal Industry sends the top management. They consider the combination by spinning off or transferring operations.The new firm will have around 14 billion yen of annual sales and 25,000 tonnes of output including the subsidiaries in Japan and China. The new firm becomes Japanese top maker as large as Nippon Seisen. They close Itami plant of Sumitomo Electric Steel Wire after the combination to integration into Narashino, Yamaguchi and China.