Saturday, September 28, 2013
Toray To Buy Korean Producer Of Water-Purifying Membranes
TOKYO (Nikkei)--Toray Industries Inc. (3402) said Friday that it will buy a South Korean manufacturer of water treatment membranes, and has earmarked a total of 100 billion yen for that acquisition and to purchase U.S. carbon fiber producer Zoltek Cos.
Toray's South Korean unit made a successful bid to win the priority negotiation rights to buy a 56.2% stake in Woongjin Chemical Co. It intends to purchase shares from major stockholders and turn the firm into a subsidiary as early as this year. The acquisition price is estimated at around 40 billion yen.
Woongjin Chemical, which generated 80 billion yen in sales in 2012, makes high-performance fibers and reverse-osmosis membranes for filtering water.
Toray, which controls a quarter of the global market for reverse-osmosis membranes, aims to boost its share to almost 30% through the acquisition, according to President Akihiro Nikkaku. The global leader in this field, U.S. firm Dow Chemical Co., has a market share of slightly more than 30%.
Toray has strength in high-performance membranes for large facilities, including desalination and wastewater treatment plants, while Woongjin Chemical mainly makes membranes for home water purification systems, so their customers do not overlap. And production synergies are expected because the South Korean factories of Toray's local unit are close to Woongjin Chemical's, according to Toray Vice President Junichi Fujikawa.
Toray, the global carbon fiber leader, also officially announced that it will acquire third-ranked Zoltek for 584 million dollars, or roughly 58 billion yen. The U.S. company logged 18.6 billion yen in sales for the year ended in September 2012. Their combined production capacity accounts for more than 30% of the worldwide total, exceeding that of second-ranked Teijin Ltd. (3401) by almost 20 percentage points.
In line with its medium-term business plan, Toray had focused on overhauling its founding business of textiles, including entering into apparel production. It has expanded its capacity for carbon fiber at home and abroad. Even though it had set aside 200 billion yen for mergers and acquisitions, it had barely conducted any large deals until now.
(The Nikkei, Sept. 28 morning edition)