M'bishi Chemical to turn M'bishi Rayon into wholly owned subsidiary+

TOKYO, Nov. 19 Kyodo - Mitsubishi Chemical Holdings Corp., Japan's largest chemical company, said Thursday it aims to turn major synthetic fiber maker Mitsubishi Rayon Co. into a wholly owned subsidiary by next March, a move that would create the world's
sixth-largest chemical group in sales.

In the deal worth as much as 217.4 billion yen, Mitsubishi Chemical aims to
boost its profitability and enhance its competitiveness in global markets by
integrating Mitsubishi Rayon's carbon fiber business, a potential growth field.
Mitsubishi Rayon is seeking to stabilize its financial standing by joining the
Mitsubishi Chemical group, said the companies that have no capital ties at
present.
The two companies are expected to generate annual group sales of 3.5 trillion
yen in the immediate future, compared with 3.2 trillion yen in their combined
sales in fiscal 2008 through this March.
The alliance will create synergy effects that would enable the two firms to
achieve a cost reduction of 3 billion yen and another 7 billion yen boost in
their businesses by fiscal 2012, the companies said.
The move represents the largest realignment in the Japanese petrochemical
industry since Mitsui Chemicals Inc. was launched in 1997 through the
integration of Mitsui Petrochemical Industries Ltd. and Mitsui Toatsu Chemicals
Inc.
Petrochemical exports to Chinese and other Asian markets are a major cash cow
for Japanese chemical producers. But they are at risk of getting saddled with
excess output capacities because of growing competition with low-priced
products made in China and the Middle East, analysts say, suggesting
realignments would continue in the industry.
Under the agreed plan, Mitsubishi Chemical will launch a tender offer from
early February to the end of March for all of Mitsubishi Rayon shares at 380
yen per share.
This is expected to cost 217.4 billion yen if Mitsubishi Chemical secures all
outstanding shares. If it fails, the two companies will conduct stock swaps,
they said.
Yoshimitsu Kobayashi, president and chief executive officer of Mitsubishi
Chemical, said in a news conference, ''With the move, we would be able to keep
pace with global competition,'' alluding to competitors in China and the Middle
East.
Masanao Kambara, Mitsubishi Rayon president, said their plan will be good for
each other in terms of technology development and in achieving the vision of
global expansion.
They aim to post a consolidated operating profit of over 400 billion yen on
sales of more than 5 trillion yen by fiscal 2015.
''We need to think along the lines of consolidating and increasing efficiency,
while protecting employment, in order for us to survive globally, given that
the times now are seeing China and other powers emerging (in this sector),''
Kobayashi said.
With competition in China and the Middle East, he said expanding the scale of
their companies will gain them ''bargaining power,'' noting they would not be
able to exercise any dominance in the industry if they remain small, separate
companies.
Combined, the two firms can accelerate their overseas expansion and alliance
which includes various companies in Asia, Europe and the Middle East, the two
firms said.
Mitsubishi Chemical Holdings has Mitsubishi Chemical Corp., Mitsubishi Plastics
Inc., and Mitsubishi Tanabe Pharma Corp. under its wing.
Mitsubishi Rayon is now listed on the first sections of the Tokyo Stock
Exchange and the Osaka Securities Exchange. But it will be delisted after
becoming Mitsubishi Chemical's wholly owned unit.
==Kyodo
2009-11-20 00:31:34