Japan's biggest sugar producer, Shin Mitsui Sugar Co., and two other sugar refiners affiliated with Mitsui & Co. said Thursday they have signed a contract to merge next April 1.
Shin Mitsui Sugar will be the surviving entity of the merger with Taito Co., the nation's fifth-largest sugar refiner, and midsize KS Co., the companies said.
One share in Taito will be exchanged for 1.05 shares in Shin Mitsui Sugar and one share in KS for 394 shares in Shin Mitsui Sugar.
The new firm -- to be named Mitsui Sugar Co. -- will have a market share of about 23 percent, about twice as big as the 11 percent share held by second-ranked Dai-Nippon Meiji Sugar Co., an affiliate of Mitsubishi Corp.
The merger is designed to boost competitiveness in the shrinking Japanese sugar market by improving manufacturing and marketing efficiency, they said.
Japanese sugar refiners are facing a tough business environment due to a surge in cheap imports and sluggish domestic demand amid growing public dietary concerns.
Shin Mitsui Sugar and its two merger partners produce about 500,000 tons of sugar a year. Their combined sales totaled 72.8 billion yen for the year that ended on March 31, 2003.
The three sugar refiners will continue to run their four refineries in Japan for the time being, but may consolidate them in the future, company officials said.
Shin Mitsui Sugar was created in April 2001 through the merger of No. 2 sugar refiner Mitsui Sugar Co. and Nissho Iwai Corp.-affiliated Shin-Meito Co.