November 1, 2004

Merger of Tokan Packaging System Co., Ltd.
and Nichiita Package Industries Co., Ltd.

Tokan Kogyo Co., Ltd.
Tokan Packaging Systems Co., Ltd.
Nippon Daishowa Paperboard Co., Ltd.
Nichiita Package Industries Co., Ltd.

Tokan Packaging System Co., Ltd., a subsidiary of Tokan Kogyo Co., Ltd., and Nichiita Package Industries Co., Ltd., a subsidiary of Nippon Daishowa Paperboard Co., Ltd., have reached a basic agreement to merge.

Both companies manufacture and sell corrugated carton board, and operated a business tie-up since October 2003 to cooperate in production, procurement and logistics. Faced with a difficult environment in the paperboard business, the two companies agreed on the need to integrate their resources and achieve more efficient management, to bolster their competitiveness.

The new-merged company will be a member of the Toyo Seikan Group and the Nippon Paper Group. It hopes to quickly benefit from the merger and become a main affiliate to the two groups, encouraging profitability in both.


1. Profile of the new company
*Surviving company: Tokan Packaging System Co., Ltd.
* Head office: Tokyo
* Date of merger: October 1, 2005
* Sales: 64 billion yen (simple total)
* Number of employees: 1,400
* The company name, representative director and board members, capital, consolidated ratio
and organization have yet to be decided.

2. Effects of merger
The ratio of in-house production will be increased for greater efficiency, while taking advantage of the strengths of both companies. In addition, logistics will be made more efficient to reduce logistics costs.
An initiative will also be undertaken for unified and more advantageous materials procurement and to streamline business procedures in the managerial and indirect divisions. This will bolster operational efficiency.

Merger companies

  Tokan Packaging System Co., Ltd. Nichiita Package Industries Co., Ltd.
Sales
35 billion yen
29 billion yen
Capital
400 million yen
306 million yen
Number of employees
640
760
Shareholder
Tokan Kogyo Co., Ltd. 100%
Toyo Seikan Kaisha, Ltd. has invested 84% on Tokan Kogyo Co., Ltd.
Nippon Daishowa Paperboard Co., Ltd. 100%
Nippon Paper Group, Inc. has invested 100% on Nippon Daishowa Paperboard Co., Ltd.