Carlyle pursues $221m Japan chemicals take-private
The Carlyle Group has launched a tender offer for Seiko PMC that values the Tokyo-listed paper and ink chemicals manufacturer at approximately JPY 32.4bn (USD 221m).
The private equity firm has already agreed to acquire 16.5m shares - or a 54.5% stake - from DIC Corporation, Seiko PMC's parent, for JPY 1,070 apiece. At least 3.68m additional shares, amounting to a 12.2% interest, must be sold for the tender to proceed, according to a filing.
The offer price represents a 90% premium over the closing price on August 31. The stock is currently in a trading halt at JPY 567, giving Seiko PMC a market capitalisation of JPY 17.2bn.
DIC said in a filing that its decision to sell Seiko PMC to a private third party was to focus its resources on a new digitalisation and sustainability agenda. It added that Carlyle, as a global operator with cleantech credentials, was the company’s “most suitable partner.”
Carlyle Japan was notably active in ecological new materials in 2021, when it invested JPY 24.4bn in local biomaterials developer Spiber in its first minority deal. Spiber is best known for developing protein-based materials that simulate the characteristics of spiderweb, which is 340 times stronger than steel, pound for pound.
The private equity firm recently launched its fifth Japan fund, targeting JPY 400bn, a 55% increase on the previous vintage.
Seiko PMC was established in 1968 as DIC-Hercules Corporation, a 50:50 joint venture between DIC and US chemicals maker Hercules. It became a 100% subsidiary of DIC in 1992, merged with resins specialist Seiko Chemical Industries in 1996, and listed on the Tokyo Stock Exchange in 2003.
Papermaking products span a range of coagulants, adhesives, microbial materials, and resins for purposes such as improving ink receptivity in a printer. There is a separate business line for resins focused on properties such as pigment dispersion, water resistance, and glossiness.
New materials development works encompasses non-toxic biofilms and papermaking resins made from wood pulp derived from sustainable biomass. The company is also a material to be used in flexible touch panels and novel solar cell electrodes. The latter project, like Spiber’s core product, is categorized as a “nanowire.”
Sales improved 4.5% year-on-year for the 12 months ended December 2022 to JPY 32.4bn, while net profit declined 20.9% to JPY 1.6bn. In the first six months of 2023, sales fell 3.8% year-on-year to JPY 15.3bn, and profit fell 27.9% to JPY 941m.
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