Aug. 29 (Bloomberg) -- Furukawa-Sky Aluminum Corp., Japan’s biggest maker of rolled aluminum products, agreed to take over Sumitomo Light Metal Industries Ltd. as the companies seek to pare costs and compete with international rivals.
Sumitomo Light Metal investors will get 0.346 shares of Furukawa-Sky for each share they own in Japan’s largest fabricator of the metal, the two companies said today in a statement to the Tokyo Stock Exchange. Sumitomo Light Metal will be delisted on Sept. 26, 2013, and the deal is expected to be completed on Oct. 1, 2013, according to the statement.
The combined company will seek to reduce costs and accelerate expansion in emerging markets as domestic producers face intensifying competition from rivals in China and South Korea and demand in Japan falls amid an aging population, the two companies said. The value of the deal wasn’t given in the statement.
“Competition in Southeast Asia is increasing,” Furukawa Sky President Mitsuru Okada told reporters today in Tokyo. “If things remain unchanged, it will be difficult for us to survive.”
Furukawa-Sky shares gained 0.5 percent to 208 yen at the close on the Tokyo Stock Exchange. Sumitomo Light Metal fell 2.5 percent, the most since Aug. 15, to 77 yen.
The proposed merger is subject to approval from competition regulators in Japan and abroad, according to the statement. Yukio Edano, Japan’s trade minister, supported the deal, saying it will help strengthen competitiveness in the global market, according to a statement on the ministry website.
Furukawa Sky and Sumitomo Light Metal had combined sales of 452.9 billion yen ($5.4 billion) in the financial year ended March 31, according to the statement.
Okada of Furukawa Sky will become president of the combined company, while Sumitomo Light Metal President Shigenori Yamauchi will be chairman, the companies said.
Mizuho Securities Co. and Nomura Securities Co. acted as financial advisers to Furukawa-Sky, while SMBC Nikko Securities Inc. and Daiwa Securities Group Inc. advised Sumitomo Light.
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