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Tepid welcome for Minolta-Konica merger
TOKYO, Japan -- Shares in Minolta and Konica are falling on Wednesday as the market treats their merger plans with skepticism. The two camera and office-equipment makers agreed on Tuesday to merge their operations under a holding company in August, to improve their financial health. The companies aim to cut 4,000 jobs by 2005, from their combined work force of 38,500. The companies also hope to trim 50 billion yen ($418 million) in costs a year. Combined, Konica and Minolta will have sales of more than 1 trillion yen ($8.4 billion). But they will still lag rivals such as Canon Inc., Fuji Photo Film Co. and Ricoh Co. The companies have also fallen behind their rivals in moving into the digital and color world for their printers and cameras. That reality is sinking in on Wednesday. "This is a merger between two weak rivals and there are doubts if they can come up with products to match those of Canon and other larger competitors," Shuichi Hida, portfolio manager at Sanyo Investment Management, told Reuters. Trying to boost camera shareMinolta shares are down 3.92 percent at 515 yen on Wednesday morning, with Konica Corp. off 2.55 percent at 842 yen. Stock in both companies rallied on Tuesday on initial word of their tieup, only to lag by the close, with Konica ending in the red. Besides cutting costs, Minolta and Konica will be looking to reduce their combined debt load of around 400 billion yen. Konica President Fumio Iwai will become president of the new holding company, Konica Minolta Holding Inc. Minolta will merge into it, with its shares eventually being delisted. Although the two companies have similar sales of around 500 billion yen, Konica's market capitalization is more than double that of Minolta, leaving it in a commanding position in the merger. Iwai said the company will strive to catch its larger rivals. "We feel very strongly that we want to catch up with the 'three powers,' " he said at a news conference. The companies have fallen behind Canon, Sony Corp. and Olympus Optical in the digital-camera market. But they vowed to double their global market share of around 8 percent over the next three years. The company will sell its cameras under the Minolta brand and sell film under the Konica name.
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