Mitsubishi Rayon to buy Britain's Lucite for $1.6 bil.

TOKYO, Nov. 11 Kyodo - Mitsubishi Rayon Co. said Tuesday it will acquire Britain's Lucite
International Group Ltd., the world's largest supplier of acrylic monomers, for
$1.6 billion by the end of January, becoming itself the world's top player in
the field.
Mitsubishi Rayon said it has reached an agreement with Lucite's leading
shareholder, Charterhouse Capital Partners LLP, that the Japanese chemical firm
will buy all the outstanding Lucite shares in cash.
The Japanese firm, currently the world's fourth largest firm in the market for
acrylic monomers, said it is a friendly takeover as Lucite's board supports the
deal. The material is used in a broad range of products, including parts for
liquid crystal display panels and materials for automotive parts.
Mitsubishi Rayon logged 419 billion yen in sales in fiscal 2007 that ended in
March. Based in Southampton, Lucite raked up about 187 billion yen in sales in
fiscal 2007. Their combined sales would total over 600 billion yen.
Mitsubishi Rayon said the acquisition is a ''big step forward'' to achieving
its goal of becoming a company with sales of 1 trillion yen.
Mitsubishi Rayon is betting on the acquisition in view of the growing world
market for the material. It also comes at a time when Japanese companies feel
encouraged to acquire overseas firms as world stock prices have declined while
the yen's value has appreciated amid the global financial crisis.
''The current tough time, this is a chance in a million,'' Mitsubishi Rayon
President Masanao Kambara said at a press conference in Tokyo, adding that the
acquisition cost was much lower than it had originally planned due to the
global financial meltdown.
Kambara said his firm would also seek a strategic business partner in the
future to expand the chemical material business.
Lucite Chief Executive Officer Ian Lambert told the same press conference that
the British firm welcomes the acquisition by Mitsubishi Rayon, which has
similar values and a long tradition in the acrylics industry. ''In both
geography and technology, we complement and reinforce one another,'' he said.
Through the acquisition, Mitsubishi Rayon will obtain the world's top position
in the field of acrylic monomers with a market share of 35 percent, surpassing
Dow Chemical Co. of the United States, the second-largest maker with a 15
percent share, Mitsubishi Rayon said.
Mitsubishi Rayon said it plans to acquire all 9,556,000 outstanding shares in
Lucite from Charterhouse, which has an 81.6 percent stake, and other
shareholders after obtaining approval from related authorities.
Mitsubishi Rayon and Lucite have been cooperating to mutually supply their
acrylic monomer products at their overseas factories under an agreement reached
in 2005.
By fully acquiring the British firm, Mitsubishi Rayon said it will obtain
production bases in the United States and Europe, in addition to its factories
in Asia, enabling the firm to secure strong customer bases in those markets.
The deal would also help the Japanese firm to speed up expanding its business
in emerging markets such as Eastern Europe, Russia and South America, utilizing
Lucite's sales networks, it added.
Synergies are also expected to come from technological cooperation, and cost
cuts from cooperation in distribution and material procurement, as well as
sales, it said.
Acrylic fibers for clothing have been one of Mitsubishi Rayon's main products.
But the firm incurred operating losses in the business in the first half of
fiscal 2008, ending next March, due to a global slowdown in demand.
The Tokyo-based firm is aiming to boost its earnings by strengthening its
business in acrylic monomers as demand for the material is expected to grow
globally.
Given a shrinking domestic market in aging Japan, Japanese companies are
stepping up efforts to buy overseas firms to expand their global footholds.
==Kyodo