Reportedly, Nippon Steel, the largest steel producer in Japan said it inked a merger agreement with Sumitomo Metal.

The new company will be named Nippon Steel and Sumitomo Metal Corporation which is made under the ration of 0.735 Nippon Steel shares to 1 Sumitomo Metal’s shares.

Furthermore, the two parties expected that the new company will help to strengthen the competition in global steel market

In the background, the two companies launched the merger plan in February, 2011 and they received the approval from Justice Committee in December, 2011.

The new company is scheduled to be established in October, 2012.