Nippon Paper Group Inc., the country's second-largest pulp and paper company, will propose a tieup with Hokuetsu Paper Mills Ltd. next week, sources said late Wednesday.
The move could deal a further blow to market leader Oji Paper Co., after its hostile takeover bid for Hokuetsu failed.
Nippon Paper helped Hokuetsu fend off Oji's tender offer, taking an 8.9 percent stake in Hokuetsu.