September 29, 2005
Tokyo, September 29, 2005 - The Furukawa Electric Co., Ltd. (Furukawa Electric) and Otsuka Chemical Co., Ltd. (Otsuka Chemical) signed a definitive agreement with HT Troplast GmbH to acquire Trocellen GmbH (Trocellen), the cross-linked polyolefin (XLPO) foams business unit of HT Troplast GmbH , owned by the Carlyle Group and Advent International.
The acquisition permits Furukawa Electric to enter the European market in which it was so far not present. Following the acquisition, Furukawa Electric, currently the fourth largest producer of XLPO foams on a worldwide basis, will become the second largest producer doubling its sales. Furukawa Electric plans to further increase its global sales in the short term by expanding its XLPO foams business in other regions of the world where it is active. The acquisition will enable Otsuka Chemical to not only enhance its added value as a supplier of industrial raw material by accelerating the development of highly functional materials focusing on customers’ demand, but also to expand its global operations by utilizing already available foreign facilities.
In its mid-term business plan through 2006, Furukawa Electric has set a goal to become “a creative and highly profitable company with a global presence by technological innovation“ as part of the Furukawa Survival Plan being implemented on a company-wide basis.This acquisition is a strategic investment to achieve the current mid-term plan and to solidify the next mid-term plan, and it marks the first full-scale investment from the JPY 20 billion Furukawa Electric raised in March 2005.
Otsuka Chemical will be broadening the scope of its operations as a supplier of industrial materials,. Furthermore, Otsuka Chemical intends to further expand its materials supply business in Europe through the synergies created by enhancing the partnership with its existing European manufacturing facilities.
Overview of the acquisition and objectives
Based in Germany, Trocellen GmbH is a multinational company operating XLPO foams business through affiliated companies located, inter alia, in Italy, Romania, Spain, Malaysia, Brazil and Hungary. Using its cutting edge conversion technology combined with various materials, Trocellen supplies waterproof sheets, panels, steering wheels and interior components manufactured by converting various materials to major European automakers, an area in which strong growth in demand is expected. Trocellen also supplies footwear, sport & leisure goods and other products.
The joint acquisition of Trocellen will enable both Furukawa Electric and Otsuka Chemical to share and advance the development of new materials and products and deliver new products to the market faster. Furukawa Electric will also be able to strengthen its business relationship with automakers operating in China and other Asian countries and realize greater synergies.
Furukawa Electric and Otsuka Chemical will directly own a 60% and 40% interest in Trocellen, respectively.Trocellen’s existing brands, customers and employees will remain unchanged. The transaction is expected to be completed by the end of this year, subject to relevant merger control clearances.
Background of the acquisition
In March 2005, Furukawa Electric established a JPY 20 billion strategic investment fund to carry out its growth strategy. Cross-linked polyolefin is one of the core plastic technology areas in which the company plans to build on using this strategic fund. The XLPO foams business of Furukawa Electric’s energy & industrial products company carries an extensive line of cross-linked and foamed products manufactured using polyethylene (PE), polypropylene (PP) and other polyolefin resins. These products are used in air conditioners & other electronic home appliances, thermal insulation & soundproof housing materials, automotive interiors and sporting & sundry goods, which are expected to grow on a global scale.
Since 1968, Furukawa Electric has been expanding its business with a focus on the domestic market, while granting licenses and manufacturing technologies to major European and Asian manufacturers. However, as part of a medium-to-long-term goal to strengthen its business, Furukawa Electric began to build a global operation.It established a manufacturing facility in China in 2001 and another in Malaysia in 2002.Furukawa Electric will be expanding its business further by entering the European market through this acquisition.
Otsuka Chemical, the chemical products division of the Otsuka Pharmaceutical Group, is expanding its operations by developing new materials and products using its proprietary plastic additives. Otsuka Chemical is planning to strengthen its fine chemicals, functional materials and functional chemicals operations through overseas acquisitions, and expansion of its overseas production facilities in Spain, South Korea, China and Indonesia. The joint acquisition of Trocellen will enable Otsuka Chemical to accelerate its plans.
Outline of Trocellen GmbH
- Head office: Troisdorf,, Germany
- Sales: Over JPY 10 billion
- No. of employees: Approximately 700
- Business: Manufacturing and sales of cross-linked polyolefin (XLPO) foams
Outline of The Furukawa Electric Co., Ltd. (consolidated figures)
- Head office: 2-6-1, Marunouchi, Chiyoda-ku, Tokyo
- President: Hiroshi Ishihara
- Sales: JPY 775.9 billion (year ended March 2005)
- No. of employees: 7,759 (as of March 31, 2005)
- Establishment: 1884
- Business: Manufacturing and sales of industrial materials (foam products, conduits and pipes), energy industry-related products (bare wires, aluminum wires, power cable), telecom industry-related products (optical fiber cable, metal telecommunication cable), metals (rolled copper, combined strips), light metals (aluminum plates, extrusion molded products) and electronics and automotive systems (automotive parts, magnet wires)
Outline of Otsuka Chemical Co., Ltd. (on a non-consolidated basis)
- Head office: 3-2-27, Ohte-dori, Chuo-ku, Osaka
- President: Akihei Mori
- Sales: JPY 43 billion (year ended August 2004)
- No. of employees: 665 (as of August 31, 2004)
- Establishment: 1950
- Business: Manufacturing and sales of chemicals, agricultural chemicals and fertilizers