On April 1st this year, Taiyo Nippon Sanso will launch a wholly owned subsidiary called Taiyo Nippon Sanso Gas & Welding, as part of company restructuring.

It will be formed through the merger of downsteam distribution companies Saan-Tech, Futaba Bussan, and Toei Kagaku, with Saan-Tech being the surviving company. The purpose is to cope with shrinkage of the cylinder and welding business which has been hit by the maturing of the manufacturing industry in Japan.

The new company will be capitalised at ¥100m, and the number of employees will be on the order 400 from all three companies. Sales for the term ending in March 2014 should total ¥22bn, with the operating profit of about ¥500m, bring a new major gas distributor into being.

As for the future, the new company will be further involved in the merging and reorganisation of other group companies of Taiyo Nippon Sanso. At the same time it is positioning itself to raise sales up to ¥40bn by concentrating corporate assets and improving its competitive capacity. Consequentially reorganisation of downstream distribution by the group could very well accelerate.

A glance at the structure of the three company merger shows that the surviving company Saan-Tech will become involved in the development of its own cylinder management system. This will be in addition to the cylinder business and sales of welding materials they are expanding in the west of Japan. Saan-Tech is an industrial gas company and has multiple faces.

In April 2011, the company sold its industrial has manufacturing and welding materials businesses in the east part of Japan to Toatsu Yamazaki, focusing on business concentration. Its sales amounted to ¥16.3bn for FY2012 ending March 2012, so that the company could rank itself as a major gas distributor.

The Public & Investor Relations of Taiyo Nippon Sanso noted, “We will be making adjustments later regarding the details but on the occasion of the current merger and absorption, we will be promoting increased business efficiency through consolidation of the business locations of the companies involved.”