Construction firms Hazama Corp. and Ando Corp. announced Thursday they have agreed to merge next April in the face of the sector’s prolonged economic downturn.
The plan is designed to raise the new entity’s competitiveness by pursuing economies of scale and streamlining operations.
The two midsize firms, whose combined sales came to about ¥351 billion in fiscal 2011, will form a new entity under a planned ratio of 0.53 Hazama share to one Ando share.
Hazama will be the surviving company, resulting in Ando being delisted from the first section of the Tokyo Stock Exchange as of next March 27, the firms said.
Ando President Toshiaki Nomura will become president of the new entity, while Hazama President Toshio Ono will serve as chairman.
The two companies originally formed a capital and business tieup in 2003, and are already collaborating over order receipts and materials procurement.
The Hazama group currently employees 2,300 workers and is a strong competitor in civil engineering projects, including the construction of dams and tunnels. Group sales totaled ¥182 billion in the fiscal year that ended March 31.
Ando’s strength lies in private-sector construction, such as homes and residential buildings. The group has about 1,600 workers and its sales stood at ¥169.3 billion in the last fiscal year.
While demand for public works has increased substantially in the aftermath of the quake-tsunami disaster that devastated the Tohoku region last year, the private construction sector has continued to dwindle since the 2008 global financial crisis.