Reorganizing the Electric Resistance-Welded Pipe and Tube Business within the Nippon Steel & Sumitomo Metal Group

Aug. 29, 2013

Nippon Steel & Sumitomo Metal Corporation
Sumitomo Pipe & Tube Co., Ltd.
Nittetsu Steel Pipe Co., Ltd.

Reorganizing the Electric Resistance-Welded Pipe and Tube Business
within the Nippon Steel & Sumitomo Metal Group


Nippon Steel & Sumitomo Metal Corporation (“NSSMC”), Sumitomo Pipe & Tube Co., Ltd. (“SPT”), and Nittetsu Steel Pipe Co., Ltd. (“NSP”), as announced on April 26, 2013, have studied a business reorganization mainly involving the merger of SPT and NSP. This reorganization would optimize the organization of the three companies’ business in electric resistance-welded pipes and tubes for mechanical structures and general structures, etc. (the “ERW Pipe and Tube Business”). We have reached the following agreement:

(1)Merger of SPT and NSP.
    Following the resolution passed by the respective board meetings of SPT and NSP, a merger          agreement has been executed today to create an integrated company (the “New Company”).
(2)Reorganization and optimization of the product lineup between NSSMC and the New Company.
(3)Transfer of NSSMC’s capital stock or equity holdings in overseas firms in the ERW Pipe and            Tube Business (collectively “shares and interests”) to the New Company.

SPT, through the share exchange effectuated on August 1, 2013, has become a wholly-owned subsidiary of NSSMC.

1.Purpose of Business Reorganization
Among the problems in the ERW Pipe and Tube Business of the NSSMC group were the three companies’ overlapping of products sold, excess production capacity in Japan, and a contorted state of equity ownership and factory management in some overseas operations (equity owned by NSSMC while factory managed by SPT). This time, by the serial reorganization, we aim to effect an optimum and efficient utilization of the managerial resources and more in-depth sharing of business strategies of the whole group, for enhanced competitiveness and further development of the group’s ERW Pipe and Tube Business.

In Japan, with the merger of SPT and NSP, manufacturing technologies and know-how of both companies will be combined synergistically. Product lineups of NSSMC and the New Company will be rearranged so that their respective characteristics and strengths can be best utilized. The reorganization of production systems, such as the relocation of production to be closer to centers of demand, is also anticipated. In this way, we aim for a more efficient business structure and better and faster response to customer needs.

Overseas, the management of our overseas operations will be centralized in the New Company, which, in Japan, produces most of the small-diameter ERW pipes and tubes in the group. In this way, we can consolidate the operations of our production bases in Japan and overseas and implement a timely and efficient transfer of production and know-how, with the aim of providing highly responsive service to the global expansion of our customers.

2.Outline of the Business Reorganization
(1)Merger of SPT and NSP
(i)Schedule for the merger
April 26 (Friday), 2013: Execution of the basic agreement
August 29 (Thursday), 2013: Execution of the merger agreement
October 1 (Tuesday), 2013 (scheduled): Effective date of the merger
   
(ii)Method of the merger
The merger shall be effected by absorption, SPT being the surviving company and NSP being the absorbed company.

(iii)Outline of the New Company
 Name NIPPON STEEL & SUMIKIN PIPE CO., LTD.
 Location 1-3, Yurakucho 1-chome, Chiyoda-ku, Tokyo
 Representative Rempei Nakanishi, Representative Director and President

(2)Reorganization and optimization of the product lineups
(i)Principles
NSSMC’s products are to be those developed in conjunction with material development, upstream processes and other products (flats, bars, seamless pipe, etc.). NSSMC will utilize its resources as a general steel manufacturer and intends to respond to customer needs for changes in types of materials or major improvements in manufacturing process, etc.
Products that NIPPON STEEL & SUMIKIN PIPE will produce will be those which are to be developed and improved as an extension of the existing products and production processes. Utilizing its special technology and know-how as an ERW specialist, it aims to provide services precisely tailored to customer requirements.

(ii)Time of transfer of the product lineups
The transfer is tentatively scheduled for April 1, 2014.
The time and specific details of the transfer shall be determined through consultation with our customers.

(3)Transfer of NSSMC’s shares and interests in overseas firms to the New Company
(i)The related overseas firms of this transfer
Unless there is any major administrative or regulatory hindrance to the procedures of shares and interests transfer in the countries involved, all the shares and interests held by NSSMC in the overseas firms in the ERW Pipe and Tube Business will be transferred to the New Company.

(ii)Time of this transfer
January 1, 2014 (Scheduled)

(4)Optimization of our production system in Japan
As for the optimization of our production system in Japan, such as relocating production to be closer to centers of demand and rearranging product lineups to utilize the characteristics of each production facility, we will study specific measures so as to achieve optimum conditions at the earliest possible time.

For more information:
Nippon Steel & Sumitomo Metal Corporation
    Public Relations Center, General Administration Div.
    Tel: +81-3-6867-2135, -2977
Sumitomo Pipe & Tube Co., Ltd.
    General Administration Div. 
    Tel: +81-3-5625-1520
Nittetsu Steel Pipe Co., Ltd.
    General Administration Div. 
    Tel: +81-3-5719-9761


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