Nippon Yusen K.K., the country's leading maritime transport firm, will merge with Showa Line Ltd. in October, top executives of the two carriers announced March 27.
The planned merger -- effectively a takeover of Showa Line by Nippon Yusen to salvage the firm -- is expected to take effect Oct. 1. In the merger, eight shares in Showa Line will be exchanged for one share of Nippon Yusen, the surviving entity.
The two firms will work on details to gain approval at shareholders' meetings scheduled for June 26. "We have negotiated on the basis of the positive will of both sides. The merger will combine our businesses and help strengthen our management base," Kentaro Kawamura, president of Nippon Yusen, told a press conference.
Kawamura stressed that Showa Line is strong in the field of transporting energy and raw materials, and that the proposed merger would be beneficial to carriers, shareholders and parties concerned.
Nippon Yusen recorded 582 billion yen in total sales in fiscal 1997. Showa Line, which has been in management difficulty and made restructuring efforts, is one of Japan's five largest shipping firms, with sales of 74 billion yen forecast for the current fiscal year, but its earnings have faltered as a result of stiff competition in the global shipping market.
Showa Line estimates a 26 billion yen unconsolidated net loss for the current business year and has accumulated a 28.5 billion yen loss on a consolidated basis.
Showa Line sold its vessels for scheduled liner services to Nippon Yusen in 1988, and the company has since been concentrating on unscheduled services.