General contractors Sumitomo Construction Co. and Mitsui Construction Co. formally announced on Wednesday their plan to integrate their management but said the timing of the move and numerical business targets are still under discussion.
Management will be integrated "in one or two years' time," the presidents of the two companies said at a news conference at the Tokyo Stock Exchange.
The integration, which would be Japan's first to involve listed general contractors, would create the seventh-largest construction firm in the country in terms of consolidated revenue.
The two companies said they will reduce the number of employees to 4,600 from the current 5,163 on an unconsolidated basis by the time of the integration. This was the only numerical target revealed Wednesday.
Whether the integration would take the form of a merger or come about through reorganization under a holding company has not been decided, officials of the two firms said.
Mitsui President Noboru Sei and Sumitomo President Hitoshi Tsujimoto said the integration will take place after a tieup that will include joint research and the exchange of technologies, human resources and patents, as well as joint procurement of materials.
Market responses to the announcement were lackluster. Sumitomo Construction stocks ended at 56 yen on Wednesday, up 2 yen from the previous day, after the integration scheme was reported. Mitsui Construction stocks closed at 54 yen, up 1 yen.
The two companies, which launched talks in the fall on a tieup in technological cooperation, have not had time to hammer out management integration details, company officials said.
"It was only less than a week ago when we started to think about full-scale management integration," said Fumio Gotan, managing director at Mitsui Construction.
