Yokogawa Bridge Holdings and Sumitomo Metals Form Joint Venture in Bridge Business

Yokogawa Bridge Holdings Corp. (YBHD) and Sumitomo Metal Industries, Ltd. (Sumitomo Metals) passed a resolution to form a joint venture in bridge business at their respective meetings of the Board of Directors and entered into a basic agreement with regard to forming a joint venture today.

1.Objective of forming a joint venture
YBHD Group has been engaged in the bridge business for about 100 years and is a leading company in the industry with top-class technology and know-how that have been accumulated through its extensive track record and strong sales force. Sumitomo Metals, in comparison, is one of the world's top-class steel makers and is engaged in a bridge business where the company has a state-of-the-art factory that boasts the industry's highest productivity. It has also been developing distinctive products by using its application technology for steel materials that was cultivated in the steel business on the back of its stable procurement capability.

At present, the bridge industry is mired in a harsh environment caused by a reduction in public works and other factors. Furthermore, the Ministry of Land, Infrastructure and Transport and other orderers have started to adopt the comprehensive bidding evaluation system in earnest. Owing to its progress, it has become important, more than ever, for bidders to understand customers' exact needs and make excellent proposals that are supported by comprehensive technology and cost competitiveness.

YBHD Group and Sumitomo Metals have reached the conclusion that they need to strengthen their bridge businesses: YBHD Group's comprehensive technology and sales force will be combined with Sumitomo Metals' high productivity and strong product development capability through the formation of a joint venture between the two companies. YBHD will hold a 60% stake in the joint venture company, which will then participate in the YBHD Group. The bridge business of YBHD Group, which will be bigger in scale, is expected to benefit from enhanced negotiating power relating to procurement and cost reduction. Its capability to make proposals is also likely to improve on the back of its integrated technological capability, which spans material development to construction. This move will likely contribute significantly to an increase in the corporate value of both YBHD and Sumitomo Metals. Furthermore, YBHD Group has major factories in western and northern Japan, while Sumitomo Metals has a bridge factory in eastern Japan. From the viewpoint of geographical economic efficiency, synergies will be significant and are expected to provide an advantage in terms of competition in the future.

2.Schedule
  (1)According to the basic agreement, a final contract is scheduled to be concluded on March 31, 2009.
  (2)Sumitomo Metals will carry out an absorption-type company split of its bridge business and this business will be succeeded by its fully-owned subsidiary, Sumikin Bridge Center Co. Ltd., on July 1, 2009. The latter plans to change its corporate name to Sumikin Bridge Co., Ltd.
  (3)Sumitomo Metals will sell 60% of the shares outstanding of Sumikin Bridge Co., Ltd. to YBHD on October 1, 2009 and make it a joint operating company. Its corporate name from October 1, 2009 will be determined later.

3. Overview of YBHD
  (1)Company name: Yokogawa Bridge Holdings Corp.
  (2)Main business: Controls and manages companies engaged in the design, fabrication, construction, review, repair and supervision of steel structures, such as steel bridges and steel frames, by holding shares of these companies
  (3)Incorporated: May 1918
  (4)Location of head office: 4-4-44 Shibaura, Minato-ku, Tokyo
  (5)Representative: Tsunehiro Sasaki, President and Representative Director
  (6)Paid-in capital: 9,435 million yen
  (7)Number of employees:
     [Consolidated] 1,494 (as of September 2008)
     [Parent] 47 (as of September 2008)
  (8)Principal shareholders and their shareholding ratios (as of September 2008)
     :Yokogawa Electric Corp. 6.13%
     :Nippon Steel Corporation 4.36%
     :Japan Trustee Services Bank, Ltd. (account in trust) 3.63%
  (9)Relationship with Sumitomo Metals (as of September 2008)
     [Capital relationship] No applicable items
     [Personal relationship] No applicable items
     [Business relationship] YBHD's operating company has formed consortiums with Sumitomo Metals to conduct bidding for some bridge construction works. In addition, some of its operating companies procure from Sumitomo Metals some steel materials that are needed for the production of steel structures.

4.Overview of Sumitomo Metals
  (1)Company name: Sumitomo Metal Industries, Ltd.
  (2)Main business: Produces tubes and pipes, steel sheets and plates, construction materials, railway parts, titanium, and steel bars, etc.
  (3)Incorporated: July 1949
  (4)Location of head office: 4-5-33 Kitahama, Chuo-ku, Osaka
  (5)Representative: Hiroshi Tomono, Representative Director and President
  (6)Paid-in capital: 262,072 million yen
  (7)Number of employees
     [Consolidated] 24,998 (as of September 2008)
     [Parent] 7,184 (as of September 2008)
  (8)Principal shareholders and their shareholding ratios (as of September 2008)
     :Sumitomo Corporation 9.54%
     :Nippon Steel Corporation 9.40%
     :Japan Trustee Services Bank, Ltd. (account in trust) 4.16%
  (9)Relationship with YBHD (as of September 2008)
     [Capital relationship] No applicable items
     [Personal relationship] No applicable items
     [Business relationship] Sumitomo Metals has formed consortiums with YBHD's operating company to conduct bidding for some bridge construction works. It also supplies steel materials to some of the operating companies of YBHD.

5. Overview of the joint operating company
  (1)Company name: Name to be used from October 1, 2009 is to be determined.
  (2)Commencement date of joint operation: October 1, 2009
  (3)Location of factory: Sunayama, Kamisu City, Ibaraki
  (4)Representative: To be determined
  (5)Paid-in capital: To be determined
  (6)Ownership: YBHD 60%, Sumitomo Metals 40% (October 1, 2009)
  (7)Number of employees: 100 (plan)
  (8)Production capacity: 15,000 tons per year

6. Plan
  (1)Progress regarding the final contract to be exchanged on March 31, 2009, according to the basic agreement, will be disclosed in accordance with the Timely Disclosure Standard enacted by the Tokyo Stock Exchange (TSE).
  (2)When the joint operating company starts operation, it will become a consolidated subsidiary of YBHD. At present, its impact on YBHD's business results for next fiscal year and onward is uncertain. Going forward, when decisions or progress are made, they will be promptly disclosed in accordance with the Timely Disclosure Standard enacted by the TSE.
  (3)Details of the transfer of Sumitomo Metals' bridge business to Sumikin Bridge Center, Ltd. based on the absorption-type split method will be reported, as and when determined. The impact on Sumitomo Metals' business results is expected to be immaterial.