Tokai Carbon : Acquisition of Shares in U.S. Subsidiary of SGL GE, a Graphite Electrode Manufacturer
September 27, 2017 at 08:11 pm EDT
Share
Acquisition of Shares in U.S.
Subsidiary of SGL GE,
a Graphite Electrode Manufacturer
September 28, 2017
Tokai Carbon Co., Ltd.
Hajime Nagasaka, President & CEO
Summary of Acquisition
Acquisition Candidate
SLG GE Carbon Holding LLC,
which is engaged in the graphite electrode business. SGL GE Carbon Holding is a U.S. subsidiary of SGL GE Holding GmbH, a manufacturer of carbon products headquartered in Germany.
Acquisition
Price
12.9 billion yen*
Financing Method
Plan to finance with cash on hand and bank loan.
Calculation based on an assumed exchange rate of USD1 = JPY110. The actual acquisition price will be the adjusted price at the time the purchase of shares is executed pursuant to the acquisition agreement.
- Production capacity: 30,000 tons/year, total for both plants
Net Sales
US$80.8 million
(December 2016 / aggregate basis)
Employees
Approximately 140
Business Description
Research and development on, and manufacture and sale of graphite electrodes
Background on Acquisition
Showa Denko K.K. is acquiring SGL GE Holding GmbH in the process of industry restructuring, but had
concern with antitrust laws in the U.S.
Tokai Carbon proceeded with previously planned optimizing of production capacity and cost reduction to prepare for restructuring of the industry. Acquiring the U.S. locations will also enable the company to shift to a structure that will enable rapid establishment of a tri-regional global structure and optimization of production capacity.
Graphite Electrode Industry to Date
(Thousand tons)
Recent Industry Restructuring
1,200
A gap between supply and demand has plagued the industry for many years.
Companies have reduced production capacity by more than 200,000 tons over the past several years.
Supply capacity of 8
The reductions have not improved the balance of supply and demand and excess supply of 100K to 150K still exists.
Show Denko K.K. acquires SGL GE Holding GmbH
− However, the U.S.
business causes
concern due to antitrust laws
Tokai Carbon Co., Ltd.
Moved forward with previously planned optimizing of capacity and costs reduction to prepare for industry restructuring. However, if not for the acquisition, this would have presented the problems of decreased presence in terms of production capacity
800 graphite electrode manufacturers
Sale
Lack of an integrated structure, from manufacturing through sales in U.S.
Graphite electrode demand (excluding China and low-grade products)
400
2012 2013 2014 2015 2016
U.S.
Locations
Acquisition
Tokai Carbon Co. Ltd. published this content on 28 September 2017 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 28 September 2017 00:09:04 UTC.
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Tokai Carbon Co., Ltd. is one of the Japanese leaders in manufacturing and marketing of coal and graphite products. The group is also producing industrial furnaces. Net sales break down by family of products as follows:
- coal and graphite products (69.6%): coal, graphite electrodes, special graphite and friction materials primarily for industrial, electronic, energy, automotive and mechanic applications;
- cathodes for smelting aluminum and furnace linings (18.1%);
- industrial furnaces and heating products (6.9%): for thermal processing of ceramic products, electronic components, metals, glasses, etc.;
- other (5.4%).
Net sales break down geographically as follows: Japan (24.6%), Asia (26.7%), the United States (26.5%), Europe (11.6%) and other (10.6%).
TOKAI CARBON CO., LTD. 
