Kyoei Steel Ltd. and Tokyo Tekko Co., which are major producers of reinforced concrete steel bars in Japan, have reached a basic agreement to merge.

The merge aims to a competitive new company during the downturn demand of steel debar. The new company will have a nationwide supply network, as Kyoei Steel is strong in western Japan and Tokyo Tekko is strong in eastern Japan.

The merge ratio is expected that each one share of Kyoei Steel can get one share of the new company and each Tokyo Tekko share for 0.15 share.

Both Kyoei Steel and Tokyo Tekko will be delisted from the First Section of the Tokyo Stock Exchange on Sept. 25, as the new company will be listed there on October 1.