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Dec. 15 (Bloomberg) -- Japanese companies must “seriously consider” taking measures to compete globally as a stronger yen cuts into sales, Nippon Steel Corp. Chairman Akio Mimura said.
Domestic industries need to cut costs by investing overseas or combining operations to counter the currency, Mimura told reporters in Tokyo today, a day after Japan’s biggest steelmaker received regulatory approval for its merger with Sumitomo Metal Industries Ltd. Managements should be prepared for the yen to remain strong, he said.
The yen rose to a postwar high of 75.35 a dollar on Oct. 31, prompting Japan to intervene for the third time this year to stem gains that endangered an export-led economic recovery after the March earthquake. The merger of Nippon Steel and Sumitomo Metal, aimed at countering Asian and European rivals, dovetails with the government’s efforts to encourage takeovers to boost growth in the world’s third-largest economy.
Nippon Steel’s 685 billion yen ($8.8 billion) all-share purchase of Sumitomo Metal by October next year will create the world’s second-largest steelmaker. The partners plan to cut excess capacity and reduce executive headcount, Mimura said. They aren’t considering closing any factories, he said.
The merger was approved “faster than usual,” Masanori Fukamachi, senior officer for mergers and acquisitions at the Fair Trade Commission, said yesterday.
“I hope the regulator’s conclusion on the merger case will prompt those who were previously hesitant to move toward such directions,” Mimura said today.
--Editors: John Chacko, Rebecca Keenan
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