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Mitsui Construction Co. and Sumitomo Construction Co. said Wednesday progress is being made in their business integration talks but no specifics have been settled.

“Business integration talks have been smoothly under way” since the two firms agreed in principal Jan. 30 to form a comprehensive alliance to integrate business operations, Mitsui said in a brief statement. “But there has been no decision on what form the integration will take or the merger ratio so far.”

Sumitomo issued a similar statement.

The firms were responding to news reports saying they had already decided to merge into a single new entity on an equal footing in April.

Sources at the second-tier general contractors said Tuesday the two will sign a merger agreement possibly next week, noting they are now making final arrangements to appoint Mitsui Construction President Noboru Sei as president of the new entity, tentatively called Mitsui Sumitomo Construction.

Mitsui and Sumitomo both rank around 15th in revenues, and their merger would create the seventh-largest general contractor in Japan in terms of consolidated revenues. The two companies reported 700 billion yen in combined consolidated sales in the business year that ended in March.

In January, the two firms announced they had agreed to merge their operations within the next year, the first such move between listed general contractors in Japan.

The earlier agreement called for integration after a tieup, including the joint research of new technologies, exchanges of experts and joint procurement of materials. It also committed the firms to cutting their combined workforce of 5,163 by 500.

The head office of the new company will be located in Shinjuku Ward, Tokyo, home to the current Sumitomo Construction head office.

The planned merger is aimed at accelerating efforts to improve operational efficiency and promote restructuring to deal with deteriorating business conditions amid a decline in the number of public works projects and a prolonged economic slump.

Ailing construction company Fujita Corp. is expected to join Mitsui Sumitomo after stripping its relatively healthy construction operations from its lackluster real estate business on Oct. 1.

Sumitomo Mitsui Banking Corp. serves as the main bank for the three construction companies.

Mitsui Construction and Sumitomo Construction, both listed on the first section of the Tokyo Stock Exchange, are struggling under the heavy weight of debts associated with real-estate investments following the burst of the bubble economy in the early 1990s.

Mitsui Construction is strong in high-rise building construction, whereas Sumitomo Construction is known for its public works projects, including roads and bridges using special concrete.

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