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| Nippon Steel Corporation, Sumitomo Metal Industries, Ltd., and Kobe Steel, Ltd., Agreed on Additional Cross-Purchase of Shares Backed by Expanded and Enhanced Mutual Cooperation |
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December 19, 2007
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| I. Additional Cross-Purchase of
Shares |
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Nippon Steel Corporation (principal place of business: Chiyoda-ku, Tokyo, President:
Akio Mimura) ("Nippon Steel"), Sumitomo Metal Industries, Ltd. (principal place
of business: Chuo-ku, Osaka, President: Hiroshi Tomono) ("Sumitomo Metals"),
and Kobe Steel, Ltd. (principal place of business: Chuo-ku, Kobe, President:
Yasuo Inubushi) ("Kobe Steel") reached agreement at the end of October this year
to consider ways of further expanding and enhancing their cooperative ties and
additional cross-purchase of shares. The three companies have proceeded with
consideration of these courses of action and now reached the following agreement
regarding the additional cross-purchase of shares. The companies share the view
that increased cross-shareholdings will be effective in promoting smooth and
steady implementation of strategic cooperative measures, such as the mutual use
and sharing of core production facilities, and will assist the companies in pursuing
the mutual benefits of these arrangements based on relationships of trust.
(1) Nippon Steel and Sumitomo Metals
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Nippon Steel and Sumitomo Metals will each
purchase the other's shares in the
amount of around ¥100 billion. |
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- Nippon Steel will increase its ownership in all Sumitomo
Metals shares from 5.01% (representing a voting right percentage of about
5.3%) at present to about 9.4% (representing a voting right percentage
of about 9.9%).
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- Sumitomo Metals will increase its ownership in all
Nippon Steel shares from 1.81% (representing a voting right percentage
of about 2.0%) at present to about 4.1% (representing a voting right percentage
of about 4.5%).
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(2) Nippon Steel and Kobe Steel
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Nippon Steel and Kobe Steel will each purchase the other's shares in
the amount of approximately ¥15 billion. |
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- Nippon Steel will increase its ownership
in all Kobe Steel shares from 2.05% (representing a voting right percentage
of about 2.2%) at present to about 3.4% (representing a voting right percentage
of about 3.6%).
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- Kobe Steel will increase its ownership in all Nippon
Steel shares from 0.41% (representing a voting right percentage of about
0.4%) at present to about 0.8% (representing a voting right percentage
of about 0.8%).
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(3) Sumitomo Metals and Kobe Steel
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Sumitomo Metals and Kobe Steel will each
purchase the other's shares in the amount
of approximately ¥15 billion. |
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- Sumitomo Metals will increase its ownership
in all Kobe Steel shares from 2.05% (representing a voting right percentage
of about 2.2%) at present to about 3.4% (representing a voting right percentage
of about 3.6%).
|
| |
- Kobe Steel will increase its ownership in all Sumitomo
Metals shares from 1.71% (representing a voting right percentage of about
1.8%) at present to about 2.4% (representing a voting right percentage
of about 2.5%).
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| Note: |
1) |
The ownership and voting right percentages following the
share purchases show above are the estimates based on averaged stock prices
of the three
companies
for the past30days. |
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2) |
These additional share purchases are expected on stock exchanges by
the end
of March 2008. |
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| II. Expansion and Enhancement
of Cooperation |
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The three companies have already begun to consider ways of further expanding
and enhancing mutual cooperation as agreed upon at the end of October this year.
They will actively proceed with the joint consideration of these measures and
move toward the implementation.
|
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1. Expansion of Joint Use
by the Three Companies of Iron- and Steel-making Facilities
at Sumitomo Metals' Wakayama Steelworks as a Source of
High Grade Steel |
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Following the new No. 1 Blast Furnace at Wakayama Steelworks,
which is now under construction and is slated to come on stream in June
2009 (renewal of the current No. 4 Blast Furnace), Sumitomo Metals has
decided on basic policies for the construction of a new No. 2 Blast Furnace
at its Wakayama Steelworks, with the aim of bringing the new furnace on
stream in the latter half of the fiscal year ending March 31, 2013. This
project involves renewal of the current No. 5 Blast Furnace and expansion
of steel-making facilities, among other measures. Detailed consideration
of the construction of the new No. 2 Blast Furnace and expansion of the
joint use of iron- and steel-making facilities is now in progress. Based
on the results of these considerations, the decisions will be made on the
joint use of the high-grade steel capacity. |
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2. Nippon Steel and Sumitomo
Metals Examining Two-Way Cooperative Initiatives |
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| (a) |
Nippon Steel and Sumitomo Metals are studying ways to secure capacity
for high-grade sheet products, based on the measures outlined in 1. above. |
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(i) |
Sumitomo Metals to expand use of the hot-rolling
capacity of the Nippon Steel Group |
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Sumitomo Metals plans to draw on high-grade
steel from its Wakayama Steelworks and expand the use of the hot-rolling
capacity of the Nippon Steel Group. Detailed consideration of these plans
is already in progress. |
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(ii) |
Studies are also under way toward expanded
use of rolling capacity for sheet products at Sumitomo Metals' Wakayama
Steelworks by the Nippon Steel Group.
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| (b) |
The two companies are also examining joint initiatives regarding effective
use of facilities at Sumitomo Metals (Naoetsu), Ltd. |
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(i) |
The companies are studying such integrated
approach as will combine the use of Nippon Steel's hot-rolling capacity
with Sumitomo Metals (Naoetsu)'s downstream rolling facilities in processing
nickel-based stainless steel slabs from Sumitomo Metals' Wakayama Steelworks.
Sumitomo Metals (Naoetsu) will begin to consign hot-rolling operations
to Nippon Steel's Yawata Steelworks in the first quarter of fiscal year
2009. |
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(ii) |
Detailed consideration is also under way regarding effective
use of the rolling capacity of Sumitomo Metals (Naoetsu) by the Nippon
Steel Group for titanium. |
|
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3. Nippon Steel and Kobe
Steel Examining Two-Way Collaborative Initiatives |
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| (a) |
The two companies are studying measures related to the
production and use of direct reduced iron as well as the recycling of dust
generated by blast furnaces
and basic oxygen furnaces. |
|
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With the aim of securing alternatives to scrap steel
as well as of reducing cost of dust disposal, consideration is being given
to setting up new facilities for joint venture based on Kobe Steel's FASTMET
process.
|
| (b) |
The companies are also studying measures related to
sintering technology as well as application technology for higher-quality
pellets for blast furnaces
as part of the technology exchange between the two companies' iron-making departments. |
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It has been decided that Nippon Steel will introduce
Kobe Steel's technology for higher-quality pellets and that Kobe Steel
will apply Nippon Steel's technology for higher productivity in the sintering
operations. These steps are expected to lead to more stable production
and reductions in cost at an early date. |
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4. Sumitomo Metals and Kobe
Steel Examining Two-Way Cooperative Initiatives |
|
| (a) |
The two companies are studying an alliance between the
high-strength steel
bolts businesses of the both corporate groups. |
|
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The companies are engaged in specific discussions regarding
an alliance between Sumitomo Seiatsuhin Kogyo Co., Ltd., and Shinko Bolt,
Ltd., in the field of high-strength steel bolt production.
|
| (b) |
Sumitomo Metals will begin to consign the production
of stainless steel boiler tubes for coal-fired power-generation boilers
to the Kobe Steel Group. |
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Consignment of production of stainless steel boiler
tubes for coal-fired power-generation boilers from Sumitomo Metals to Kobe
Special Tube Co.,Ltd., a member of the Kobe Steel Group, will begin in the first quarter
of fiscal year 2008. |
| (c) |
The companies are studying expansion of consignment
of titanium hot-rolling
by Sumitomo Metals to Kobe Steel. |
|
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Specific consideration is being given to arrangements
under which Sumitomo Metals would expand the consignment of titanium hot-rolling
to Kobe Steel. |
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