Toshiba and Samsung Electronics have reached a basic agreement to combine their respective optical disc drive businesses into a joint venture company.

A memorandum of terms regarding the proposed deal was signed earlier in the day and the two companies will now work on the finer details of the merger, Toshiba said in a statement. The proposed joint venture will be 51 percent owned by Toshiba and headquartered in Tokyo, with a wholly owned subsidiary in South Korea.

To date, the two companies have agreed to include their CD-ROM and DVD-ROM product and business planning, product development, procurement and sales operations in the company. Whether to include the respective manufacturing operations is one of the areas still to be decided upon, said Keisuke Ohmori, a spokesman for Toshiba in Tokyo.

Increasing competition in the optical disc drive market is behind the plan. "Business is becoming more and more competitive and convergence is occurring," Ohmori said, citing the Hitachi LG Data Storage joint venture between Hitachi and LG Electronics, and the JVC Lite-On IT Manufacturing joint venture between Victor of Japan Ltd. (JVC) and Taiwan's Lite-On Technology.

"Toshiba and Samsung will work together to be the leading maker and aim for the world number one position," he said. Should the two companies combine their businesses as planned, Ohmori said the companies estimate they would be neck-and-neck with Hitachi in terms of sales.