Nippon Steel Corp. and Sumitomo Metal Industries Ltd. announced Thursday they plan to merge on Oct. 1, 2012, using a ratio of 0.735 Nippon Steel share to one Sumitomo Metal share.

The new company, to be named Nippon Steel & Sumitomo Metal Corp., will be the world's second-largest steelmaker and have an annual production capacity of 60 to 70 million tons, the companies said.

The merger will allow the new company to expand overseas and create synergies that allow it to save about ¥150 billion a year in costs by 2015.