NKK Corp. and Kawasaki Steel Corp. plan to rename themselves JFE Group when they merge under a joint holding company in October, the firms announced Friday.
The move is expected to reduce costs at the steelmakers -- Japan's second- and third-largest -- by 80 billion yen a year.
The holding company will be called JFE Holdings Inc. and will be responsible for the implementation of strategies for the JFE Group.
JFE Holdings plans to post a group pretax profit of 200 billion yen in fiscal 2005, up from 110 billion yen in fiscal 2000, the statement said. It will also seek to reduce interest-bearing debts to 1.8 trillion yen from 2.53 trillion yen.
The deal, announced last April, must be approved by shareholders this June.
Explaining their new name, the companies said the letter "J" stands for Japan, "F" is for "Fe," the chemical symbol of iron, and "E" stands for engineering. The new group's core business will be steel production and engineering. The companies have ideals of becoming a "future-oriented leading business group," saying the JFE acronym also stands for "Japan Future Enterprise."
JFE Holdings will issue three-quarters of a share for each NKK share and one share for each Kawasaki Steel share.
NKK and Kawasaki Steel will combine their steel production and other operations into five firms to be established under the new holding company -- JFE Steel Corp., JFE Engineering Corp., JEF Urban Development Corp., Kawasaki Microelectronics Inc. and JFE R&D Corp.
JFE Steel will operate three iron mills by integrating the two partners' existing four plants.
Kawasaki Steel Chairman Kanji Enomoto is set to become chairman of JFE Holdings, while NKK President Yoichi Shimogaichi will serve as president.
The capitalization of the holding company will be decided by the two steelmakers' general meetings as will the location of its head office.