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Konica Corp. and Minolta Co., two of the nation’s leading manufacturers of camera and office equipment, announced Tuesday that they will merge their businesses under a holding company in August to survive in the increasingly competitive market.

The alliance will create Japan’s fourth-largest precision instrument maker, with annual consolidated sales of more than 1 trillion yen, and the two firms hope the union will position them to better compete with industry leaders Canon Inc., Fuji Photo Film Co. and Ricoh Co.

At a hastily arranged news conference prompted by a report in a major daily on the planned integration, executives of the two firms said they had signed an agreement earlier in the day to consolidate their management through an exchange of shares.

“We have made various operational tieups since April 2000 to survive global competition and we have reached the conclusion that merging our businesses is the best way,” Konica President Fumio Iwai said.

The new company, Konica Minolta Holdings Inc., aims to record a consolidated net profit of 58 billion yen on revenue of 1.3 trillion yen for the 2005 fiscal year.

The executives of the two firms said they expect to increase their profits by some 50 billion yen annually as the synergetic effects of the alliance kick in beginning in fiscal 2005. That figure will be boosted by trimming redundant operations to the tune of 28 billion yen.

They also said the new company will remove some 4,000 workers from its payroll by 2005. The two firms currently have a combined workforce of 38,500.

Konica’s Iwai will become president of the new holding company, with Minolta President Yoshikatsu Ota serving as vice president.

Under the three-phase merger plan, Konica will adopt the holding company structure in April after splitting itself into six companies.

Minolta will join the holding company as a separate entity in August, and the companies will integrate similar operations and reorganize them into eight companies in October.

The officials said that while the new company’s products will bear the Konica Minolta brand, photographic film will be marketed solely under the Konica name and cameras under the Minolta brand.

The two firms said the integration is intended to help both companies better cope with intensifying competition in the market, in which demand for copiers with advanced features have placed heavy development burdens on manufacturers.

Konica shares dropped 7 yen to close at 864 yen in Tuesday’s trading session, while Minolta finished the day 8 yen higher at 536 yen. Trading in both firms’ shares was temporarily halted earlier in the morning.

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