Japan: Nippon Steel, Nisshin shedding problematic assets ahead of buyout

Nippon Steel & Sumitomo Metal and Nisshin Steel are transferring trade rights for certain operations to competitors, it was learned Monday, aiming to smooth the way for the former’s acquisition of the latter.

Antitrust watchdogs abroad have already cleared the takeover. Nippon Steel hopes to conduct a tender offer for Nisshin this coming February and turn the company into a subsidiary. Japan’s Fair Trade Commission is expected to grant provisional approval before the end of the month.

After announcing its bid for Nisshin this past February, Nippon Steel applied to the FTC for antitrust review. The commission determined that the two companies control too much market share in stainless steel sheet and in other sheet products coated with alloys combining zinc, aluminum and magnesium. It asked the duo to resolve the issues before moving forward with the deal.

Stainless steel sheet has applications in many areas, including building materials, autoparts and kitchens. Nippon Steel & Sumikin Stainless Steel is the top producer in Japan, followed by Nisshin. Their total market share exceeds 50%. To comply with rules on fair competition, business rights for a portion of these operations will go to rival manufacturers or trading houses.

Steel sheet coated with highly corrosion-resistant zinc-aluminum-magnesium alloy is used in construction materials and household equipment. The two companies virtually control the entire domestic market. Nisshin sells the product under the ZAM brand, while Nippon Steel offers the SuperDyma catalog.

Full Content: Asia Nikkei

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