May 16, 2005. /Lesprom Network/. Chuetsu Pulp & Paper Co. (3877.TO) and Mitsubishi Paper Mills Ltd. (3864.TO) said Monday they have abandoned their plan to merge operations as they haven't been able to reach agreements on areas including the reorganization of sales, distribution and other operations. The two midsize Japanese paper makers announced their merger plan in January. They had expected to join forces Oct. 1 in a bid to survive amid intensifying global competition among paper manufacturers and sluggish growth in paper demand in the Japanese market. The companies announced their merger ratio in March, and had planned to sign the merger contract later in May. Smaller but healthier Chuetsu was to become the surviving company and dispatch the new group's president. Shares of the two companies fell after the announcement. Around 0150 GMT Monday, Mitsubishi Paper was down 8.3% at Y154 while Chuetsu was down 3.2% at Y302. Chuetsu, the country's seventh-largest paper manufacturer in terms of sales and production volume, and Mitsubishi Paper, the fifth-largest, said they will continue seeking a possible business alliance.