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Top Japanese Paper Makers To Merge

March 27, 2000

TOKYO (AP) _ Nippon Paper Industries Co. and Daishowa Paper Manufacturing Co. plan to combine operations, creating Japan’s biggest paper manufacturer.

Nippon Paper is Japan’s second-largest paper maker, while Daishowa Paper is fourth-largest. The combined company is expected to capture 32.2 percent of the domestic paper market. The current leader is Oji Paper Co. with about 23.7 percent.

The merger agreement, announced Monday and expected to be completed in April 2001, will save the companies an estimated $467 million annually and allow them to take greater advantage of Japan’s rebounding paper market, analysts said.

``Our tie-up resulted from the need to better address the changes in paper demand caused by new information and telecommunications technologies as well as to cope with increasing international competition,″ said Masao Kobayashi, president of Nippon Paper, at a news conference.

The deal is subject to approval by each company’s shareholders, and analysts said the combination may run into difficulty if Daio Paper Corp., Daishowa’s largest shareholder, opposes the move.

Investors welcomed the news Monday. Nippon Paper’s shares rose 14.83 percent, while Daishowa Paper’s shares gained 9.36 percent.

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