October 12, 2008

Nippon Steel to acquire Daido Steel

Nippon Steel Corp announced an agreement to acquire Daido Steel Co's entire stake in an electric furnace steelmaking affiliate, bringing its own interest to 42.8%. The share purchase will be completed in November.

Japan’s Oji Steel Co is a specialized manufacturer of flat steel bars used in a wide range of industries, including the automaking, machinery, construction and civil engineering fields. At 380,000 tons, it is the top flat bar producer in Japan. It posted a pretax profit of JPY 4.4 billion (USD 38.3 million) in fiscal 2006 on sales of JPY 27.8 billion.

Daido Steel will sell its 35.6% Oji Steel stake to Nippon Steel, which already holds a 7.2% interest. The sale price has yet to be hammered out, but is expected to be around JPY 10 billion. Daido Steel will withdraw from Oji Steel's management and focus on specialized steel products.

Mr Kiichiro Masuda executive vice president of Nippon Steel said that "We plan to further ties among group electric furnace steelmakers, such as jointly procuring materials and sharing technology."

Nippon Steel has been increasing holdings in top electric furnace steelmakers. By bringing Oji Steel under its umbrella as an equity method affiliate, Nippon Steel aims to bolster partnerships with other electric furnace steel producers in the group.