Two leading manufacturers of bearings plan to merge next year in a deal that would create a new top company in that segment.

Japanese companies NSK and NTN said this week that they would be combined under a joint holding company next fall — effectively linking the world’s no. 3 and 4 bearing makers and, according to a report from Nikkei, taking their overall market share past the current top bearing manufacturer, SKF of Sweden.

NSK and NTN officials said that combining their businesses would provide additional scale and, in turn, reduce procurement and production costs at a time of rising prices for steel and other materials. Japan’s bearing industry, the report added, is also dealing with sluggish demand from automakers and other industries, and growing competition from China.

NSK’s president said that after evaluating potential restructuring or spinoffs, company officials determined that remaining competitive globally would require "realignment in the domestic industry.”

An official agreement is slated to be signed in approximately six months’ time; that would go before company shareholders next June, subject to reviews by antitrust regulators both in Japan and abroad. If approved, the new holding company would be established next October.

NSK will pick the new company’s president and NTN will select its chair; how they will share ownership of the holding company has not been decided, Nikkei reported.

Company officials indicated that following the merger, the combined business will focus its efforts on high-growth markets, such as drone, robot and space applications.

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