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Major seafood firms Maruha, Nichiro to merge in October
[December 11, 2006]

Major seafood firms Maruha, Nichiro to merge in October

(Kyodo News International (Tokyo) (KRT) Via Thomson Dialog NewsEdge) Dec. 11--TOKYO -- Japan's top seafood supplier Maruha Group Inc. and its smaller rival Nichiro Corp. said Monday they will integrate their operations under a holding company on Oct. 1, 2007.

Maruha and Nichiro, the third-largest in the industry, said they have decided to go ahead with the merger to cope better with a tough business environment which has seen a global rise in fish prices and saturation of the domestic market due to lower birthrates.

Maruha and Nichiro, both headquartered in Tokyo, said the new holding company will try to generate 30 billion yen ($256.65 million) in group operating profit by 2010 on sales of 1 trillion yen.

"By combining Maruha's strong global networks with Nichiro's edge in the development of food products, our supply-chain will be strengthened further," Maruha President Yuji Igarashi said at a joint news conference with Nichiro in Tokyo.

Igarashi also said it was easier for Maruha and Nichiro to decide on the integration as they have few overlapping food products, adding he first held talks with Nichiro President Tatsuhiko Tanaka on the possibility of a merger in late July.

With the merger, Maruha will change its name to Maruha Nichiro Holdings Inc., putting Nichiro under its wing as a wholly owned subsidiary through a share swap, the two firms said.

Combined sales of Maruha and Nichiro are about double the size of Nippon Suisan Kaisha Ltd., the No. 2 in the industry.

The two companies will decide on the ratio for the swap after hearing assessments of third parties. They are scheduled to sign a contract for swapping their shares in late May next year.

If their merger plan is approved at their annual shareholders meetings in late June, shares of Nichiro will be delisited from the Tokyo Stock Exchange's main section by the end of September.

Nichiro's Tanaka will assume the position of chairman at the new holding company and Maruha's Igarashi will take the post of president.

Under the holding firm, they plan to establish four companies each in charge of businesses related to fishery, food, livestock and distribution of goods before 2010.

The two companies said Maruha Nichiro will bolster its profitability by sharing their production and sales networks in Japan and elsewhere, and cooperate in developing new products and logistical operations.

Maruha Group, a holding company set up in April 2004 with Maruha Corp. as its core operating firm, returned to profitability in fiscal 2005 with 4.65 billion yen in group net profit, against a 15.14 billion yen loss a year earlier. Its sales decreased 3.7 percent to 719.28 billion yen.

Nichiro also swung back into the black during the year through March, booking 2.12 billion yen in consolidated net profit -- a turnabout from a 7.19 billion yen loss a year earlier -- on sales of 254.14 billion yen, up 2.9 percent.

Shares in the two companies surged on the Tokyo Stock Exchange's First Section after the news. Maruha rose 15 yen, or 6.38 percent, from last Friday to end at 250 yen, while Nichiro jumped 19 yen, or 9.84 percent, to 212 yen.

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Copyright (c) 2006, Kyodo News International, Tokyo
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