Sumitomo Chemical Co. and Mitsui Chemicals Inc. -- Japan's No. 2 and No. 3 chemical manufacturers -- will integrate their management and possibly merge outright as early as the fall of next year, company sources said Saturday.
The companies issued a statement saying they "are discussing various possibilities," indicating that preliminary talks are already under way.
The sources said the companies will decide at board meetings on Friday next week to embark on discussions on the details of the integration.
But they may also consider establishing a joint holding company to manage operation-by-operation subsidiaries, the sources said. Should it materialize, the integration would create the nation's largest chemical firm with consolidated sales worth 1.8 trillion yen. This would surpass the current leading firm, Mitsubishi Chemical Corp., and would also rank at No. 6 in the world.
The expected move, which comes amid the ongoing realignment of the global chemical industry, is aimed at improving their competitiveness against foreign rivals ahead of the planned cut in import tariffs on petrochemical resin products in 2004.
The move also reflects the increasingly close ties between the Sumitomo and Mitsui corporate groups, as exemplified by the planned merger between Sumitomo Bank and Sakura Bank.