Nippon Paper Industries Co., Japan's second largest paper maker, and Daishowa Paper Mfg. Co., the fourth largest, are negotiating to integrate their operations by jointly setting up a holding company by April 2001, industry sources said Saturday.

The two paper makers are expected to approve the plan by the end of this month at their respective board meetings.

If realized, the new entity would be equal in size to Oji Paper Co., the nation's largest, with sales of 2.2 trillion yen on a consolidated basis.

But Daio Paper Corp., Daishowa's largest shareholder, is expected to express opposition to the plan, the sources said. It is unclear whether Daishowa will be able to push the integration plan through its shareholders' meeting in June, the sources said.

Japanese paper makers have been posting poor business results recently because of a depressed market.

Tokyo-based Nippon Paper and Daishowa, based in Fuji, Shizuoka Prefecture, are both comprehensive manufacturers of paper products, ranging from newsprint to printing papers. They plan to make their operations more efficient by scrapping outdated equipment.

The share of newsprint of the new entity would reach nearly 40 percent of the domestic market if the integration goes ahead according to the current plan.

Nippon Paper was created through a merger of Jujo Paper Co. and Sanyo-Kokusaku Pulp Co. in 1993.

Merger moved up

Mitsui Marine & Fire Insurance Co. and Sumitomo Marine & Fire Insurance Co., which in February announced a merger plan, have agreed to seal their alliance in October 2001, company sources said Saturday.

Mitsui, Japan's third largest casualty insurer, and Sumitomo, the fourth largest, earlier planned to unite their operations some time by April 2002, but have decided to move up the merger by six months as a wave of alliances sweeps the industry, the sources said.

Mitsui and Sumitomo will also merge their life insurance subsidiaries when they link up, while other affiliates will be integrated as early as possible -- in some cases even before October 2001 -- the sources said.

In October 1999, Mitsui agreed to integrate its operations with Nippon Fire & Marine Insurance Co. and Koa Fire & Marine Insurance Co., but later backed out of this integration plan and in February sided with Sumitomo.