(Updates with comments from analyst in fourth paragraph.)
Oct. 26 (Bloomberg) -- JFE Shoji Holdings Inc. gained the most in three years in Tokyo trading, reversing earlier losses, after JFE Holdings Inc., Japan’s second-largest steelmaker, said it would buy out the company.
The shares rose 12 percent, the biggest increase since Oct. 28, 2008, to close at 352 yen. JFE Holdings climbed 4.4 percent to 1,459 yen. The Nikkei 225 Stock Average fell 0.2 percent.
Japanese steelmakers including Nippon Steel Corp. are consolidating to regain market share lost to Chinese and South Korean rivals. JFE Holdings said it plans to merge JFE Shoji Holdings and JFE Shoji Trade Corp. and turn the new company into a wholly owned subsidiary through a stock transaction.
“This is a plus for JFE Holdings,” said Takeshi Irisawa, an analyst at Tachibana Securities Co. in Tokyo. Through the merger, the company could increase business competiveness, reduce costs and simplify sales channels, he said.
The terms of the stock transaction will be decided at a later date, JFE Holdings said in its statement to the Tokyo Stock Exchange today.
Nippon Steel agreed to buy Sumitomo Metal Industries Ltd. for 726.5 billion yen ($9.6 billion) after seven months of talks, combining to become the world’s second-largest steelmaker.
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