Takara Co., Japan's No. 2 toy maker, and Tomy Co., the third-largest, said Friday they have agreed to merge March 1 next year.
Under the agreement, Tomy will be the surviving company, with Tomy President Kantaro Tomiyama staying on as president. Takara Chairman Keita Sato will act as vice president, the two companies said.
The merger ratio is set at 0.178 of a Tomy share for each Takara share.
The two toy makers and Index Corp., Takara's largest shareholder, agreed to set up a strategic joint venture on Sept. 1 in the runup to the planned merger.
The venture will serve as an agency for content and other businesses making use of characters and other assets held by the new company, and will also be engaged in advertising for the new company, they said.
The merger will create Japan's second-largest toy maker after Namco Bandai Holdings Inc., to be set up Sept. 29 this year by Bandai Co. and Namco Ltd.
Based on figures from the 2003 business year, Takara and Tomy's combined sales totaled 189.7 billion yen -- 107.2 billion yen from Takara and 82.5 billion yen from Tomy -- well short of Bandai and Namco's combined 435.7 billion yen.