Nissho Iwai Corp. and Nichimen Corp. announced Monday that they have agreed to merge their building materials subsidiaries on July 1 in response to the sluggish domestic market.
The two major trading houses' subsidiaries, Nichimen Materials and Nissho Iwai Building Materials Corp., will merge on an equal basis with Nichimen Materials the surviving entity.
The merged company will be 51 percent owned by Nissho Iwai and the remainder by Nichimen, they said.
Capitalized at 789 million yen, the new company will target annual sales of 200 billion yen, the second largest for a building materials subsidiary of a major Japanese trader. Its workforce will be about 300.
Nissho Iwai Building Materials posted sales of 114 billion yen in the fiscal year that ended March 31, 1999, while Nichimen Materials earned 62.8 billion yen.
Nissho Iwai and Nichimen said the merger would benefit from the strength of Nissho Iwai Building Material in home-produced materials and Nichimen Materials' footing in foreign products.