Japan's biggest steelmaker Nippon Steel on Friday sealed its merger with third-ranked rival Sumitomo Metal Industries, while reporting a profit drop in the fiscal year to March.
Nippon Steel said it had reached "the final accord" to merge the two companies on October 1 – as announced in September – to create the world's second-largest steel firm.
The tie-up will be made under the ratio of 0.735 Nippon Steel shares to one Sumitomo share as planned, the two firms said, adding that the new company will be named "Nippon Steel and Sumitomo Metal Corporation."
Nippon Steel separately said its net profit fell 37.3 percent from a year earlier to 58.47 billion (US$274 million) for the full business year ended March.
Revenue for the full year came to 4.09 trillion, down 0.5 percent from a year earlier and its operating profit more than halved to 79.4 billion yen.
For the fiscal year to March 2013, the company did not provide an earnings outlook, noting that it has not started price negotiations over raw materials.
Japanese steelmakers are feeling the heat from competitors around Asia, which are ramping up exports while the strong yen weighs on Japanese firms. Fears about a global economic slowdown are also clouding the business outlook.
On Wednesday, Nippon Steel said it was suing South Korea's Posco for $1.25 billion over claims it stole key technology for a niche product, amid intense competition in the steel sector.