Nippon Steel Corp. is engaged in final negotiations with its two group firms on the proposed merger of the units this business year, informed sources said Wednesday.

By merging Daido Steel Sheet Corp. and Taiyo Steel Co., Nippon Steel hopes to cut costs and raise the competitiveness of the group, the sources said.

Daido Steel and Taiyo Steel perform metal finishing, such as galvanization of steel sheet, for use in buildings.

Nippon Steel said in a brief statement that it is discussing the matter with the firms but that no specific decisions have been made.

According to the sources, Daido Steel and Taiyo Steel plan to establish a joint holding company under which they will integrate sales operations.

They will maintain their production facilities, however, after rationalizing them, the sources added. Daido Steel has two production plants — one in Shiga Prefecture and the other in Hyogo Prefectures. Taiyo Steel has a plant in Chiba Prefecture.

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