Mitsubishi Paper Mills Ltd. and Chuetsu Pulp & Paper Co. said Monday they will merge Oct. 1 on an equal basis to expand their business amid severe competition in emerging East Asian markets.

The companies held a board meeting Monday to approve a basic merger agreement. They are scheduled to sign the merger contract in late May and will merge after seeking shareholder approval in late June, they said.

Chuetsu Pulp will be the surviving entity. But the main office of Mitsubishi Paper in Chiyoda Ward, Tokyo, will be the headquarters of the new company, they said.

The merger ratio and other details will be determined at a later date.

The merger will cut 5 billion yen from annual costs for the two companies by streamlining their sales and distribution systems, and restructuring in other areas, they said.

Mitsubishi Paper plans to name a candidate for the new company’s chairman, while Chuetsu Pulp is scheduled to present a presidential candidate, they said.

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