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Japan's Teijin to Acquire Scott's CSP Auto Composites Maker for $825M

Japan's Teijin to Acquire Scott's CSP Auto Composites Maker for $825M

A. Schulman Inc. (NASDAQ: SHLM) said it has retained investment bank Citigroup to explore strategic alternatives. CSP is a leading manufacturer of thermoset composites in the automotive, heavy truck, HVAC and construction industries, and is the world’s largest sheet molding compound (SMC) manufacturer for automakers. Since its establishment in 1969, CSP has provided leading-edge technologies in lightweight materials and composite solutions such as glass fiber reinforced plastic (GFRP) for the automotive industry. Headquartered in Auburn Hills, Michigan, CSP provides full-service engineering support, and holds more than 50 patents covering materials development and manufacturing processes in composite materials formulation and design. Its Class A surfaces produced by its SMC technology have been adopted by various automakers in the US, Europe and Japan. The company has 14 facilities in the US, Mexico, France and China and approximately 3,200 employees. It posted consolidated sales of over USD $634 million in 2015. Richard L. Scott Investments LLC, a Naples, Florida-based private equity firm of businessman and politician Rick Scott, acquired CSP in February 2005. In 2008, under his ownership, CSP acquired the Budd Plastic division from Thyssen Krupp, making CSP the largest industrial composites molder in North America. He is listed as the CEO at his eponymous private investment firm from 1997 to the present, according to his LinkedIn page. He was previously the founder and former chairman and CEO of Columbia/HCA Healthcare Corp, one of the world’s largest healthcare services companies. In 2011, Rick Scott, a member of the Republican Party, became the 45th Governor of Florida. The investment management of CSP was then transferred to a family office spinoff, G. Scott Capital Partners LLC, based in Rowayton, Connecticut, led by Gregory D. Scott – no relation to Gov. Scott. From 2000 to 2012, prior to founding Scott Capital, Greg Scott and his team worked at Rick Scott’s private investment firm. According to a Form D filed with the SEC on May 29, 2014, G. Scott Capital Partners I LP had privately raised $21 million. In July 2014, CSP acquired the composite operations of Magna Exteriors. Teijin is a technology-driven global group offering advanced solutions in the areas of sustainable transportation, information and electronics, safety and protection, environment and energy, and healthcare. Its main fields of operation are high-performance fibers such as aramid, carbon fibers & composites, healthcare, films, resin & plastic processing, polyester fibers, products converting and IT. The group has some 150 companies and around 16,000 employees spread out over 20 countries worldwide. It posted consolidated sales of JPY 790.7 billion (USD $7.4 billion) and total assets of JPY 823.4 billion (USD $7.7 billion) in the fiscal year ending March 31, 2016. “We are confident that the platform for automotive composite products business we will gain through the acquisition of CSP’s complementary technical expertise in thermoset composites and GFRP know-how will trigger further development of our integrated high-performance materials business, one of our key strategic fields,” said Teijin’s president and CEO Jun Suzuki. Teijin will benefit from CSP’s established sales channels in the North American automotive market, which will enable the combined business to provide a broader range of solutions that meet automakers’ demands for weight reduction and durability, utilizing the company’s thermoplastic composite technologies. The combination of CSP’s thermoset capabilities, especially its GFRP technology, and Teijin’s high-performance composites such as carbon fiber reinforced thermoplastic (CFRTP), will help reduce weight and component count in finished products. This will in turn improve recycling efficiency and offer automakers value-added solutions that meet their requirements for more environmentally friendly components at lower cost, the company says. Teijin will also utilize CSP’s European Center for Advanced Technology in France and Teijin’s own composite production facilities to enhance its global development capabilities, allowing the combined business to better address the requirements of European, Japanese and Asian automakers. The automotive composite products business of the Teijin Group is targeting annual sales of USD $2 billion by 2030. Teijin is implementing a solutions-oriented business model as part of its long-term management vision, with development of composite applications for mass-produced automotive components one of its priorities in the field of high-performance fibers. Environmental concerns such as CO2 emission reductions and improvements in fuel efficiency are now global issues; accelerated development of tough and lightweight eco-friendly composite components is therefore a pressing task in the automotive industry. Teijin is now focused on establishing a platform for business development in automotive composite products, aiming to provide a wider range of solutions for automakers. Teijin established a Composites Innovation Center in 2008 and has focused on developing leading-edge composite product technologies and applications. In 2011 the company developed the world’s first mass-production technology for CFRTP, with a production interval time – or “takt-time” – of just one minute. Teijin subsequently established a technical facility in the US and a pilot plant for the fully integrated production of CFRTP in Japan. In 2012 it branded the world’s first CFRTP product – Sereebo™ – and has been preparing this for commercial use via high-volume production methods in collaboration with domestic and international enterprises. Meanwhile, Toho Tenax Co., Ltd., the core company of the group’s carbon fibers and composites business, has developed an integrated production system for carbon fiber-reinforced plastic (CFRP) using its Tenax® Part via Preform (PvP) technology that considerably reduces carbon-fiber waste compared to conventional preform production methods. Teijin obtained ISO/IEC 17025 accreditation for its evaluation capabilities in 2015 and ISO/TS 16949 accreditation for automotive production and relevant service part organizations in 2016. Photo: Governor of Florida, Rick Scott.]]>

Plastic Compounds, Resin Maker A. Schulman $SHLM Hires Citi to Explore Options

Plastic Compounds, Resin Maker A. Schulman $SHLM Hires Citi to Explore Options

Japan’s Teijin Ltd (TYO: 3401) agreed to acquire Michigan-based Continental Structural Plastics Holdings Corp. (CSP), a leading automotive composite supplier in North America, from a private equity investment group led by Scott Capital and previously led by Richard L. Scott Investments LLC, for $825 million. “Citi’s deep understanding of A. Schulman’s businesses, as well as expertise in financial analysis, made them an excellent and impartial partner,” said the company’s chairman Joseph M. Gingo, who was reappointed as the company’s chief executive on August 18, after former CEO Bernard Rzepka (56) was terminated. Gingo (71) had previously served in this capacity from 2008 through 2014. “We will not speculate on any potential outcomes,” Gingo said, referring to the results of Citi’s recommendations. The company has a current market capitalization of roughly $793 million, having lost practically 30% of its value since last October. “Like our fellow shareholders, the board is not satisfied with the company’s less-than-optimal performance throughout fiscal 2016,” said Gingo. Schulman, which was founded in 1928, has grown by acquisition and completed 11 deals in the last six years, spending $1.4 billion for these companies. The largest was its $800 million acquisition of Citadel Plastics in 2015, a few months after Rzepka had taken over as CEO. Ironically, the price paid to acquire Citadel is about the same as Schulman’s current total market value. “Unexpected problems at Citadel’s Lucent Polymers unit proved to be the first falling domino that led to Rzepka’s ouster,” according to trade publication Plastics News. However, some industry experts have speculated that Schulman’s current challenges might also be the result of its excessive reliance on the use of recycled resins, while lower oil prices have lowered prices for raw materials such as virgin resin. According to BCC Research analyst Charles Forman, the compounding of plastic resins is the addition of other materials to “neat” resins in order to add desirable properties or to make them more processable. Three types of companies conduct the operation: resin producers; plastics processors (such as injection and blow molders, thermoformers, extruders and film/sheet producers); and independent compounders like A. Schulman—companies whose business is making plastic compounds and masterbatches, not resins or molded plastics products, Forman says. Customer demand for high-performance compounds continues to grow, especially in the automotive as well as electrical and electronics markets, according to BCC, which expects compounding by processors to grow faster than that by producers or independent compounders. With approximately 80% of its net sales in markets outside of the United States, Schulman has a strong application knowledge, supported by a global manufacturing organization to serve a wide range of markets. It employs 4,900 people and has 57 manufacturing facilities globally. The company’s customers span a wide range of markets such as aerospace, automotive, energy, military & defense, packaging, mobility, building & construction, electronics & electrical, agriculture, personal care & hygiene, sports, leisure & home, custom services and others. Schulman is a leading global supplier of Quantum AMC carbon fiber advanced molding compounds for high-performance automobiles, such as the Dodge Viper and Lamborghini Sesto Elemento (photo above). Schulman reported net sales of approximately $2.4 billion for the fiscal year ended August 31, 2015.]]>

Westlake Chemical $WLK to Acquire Axiall $AXLL in $3.8B Deal

Westlake Chemical $WLK to Acquire Axiall $AXLL in $3.8B Deal

Axiall agreed to sell its window and door profiles business to private equity firm OpenGate Capital. Axiall had also agreed to sell certain assets of its compound additives business, known as Solucor, and its manufacturing facility located in Bradford, Ontario, to Galata Chemicals of Southbury, Connecticut. “This transaction aligns two remarkable companies, creates a company with greater financial and operational flexibility and accelerates our growth strategy,” said Albert Chao, Westlake’s president and CEO. “We are pleased to have reached this agreement with Westlake, which provides our stockholders with immediate recognition of the long-term value of our company, underscoring our Board’s commitment to maximizing stockholder value,” said Timothy Mann, Jr., Axiall’s president and CEO. The deal has been unanimously approved by the boards of directors of both companies and is expected to close by the fourth quarter of 2016, subject to the approval of Axiall’s stockholders and customary closing conditions. Westlake has received commitments from its banks to finance the transaction. Deutsche Bank and Goldman, Sachs & Co. are acting as financial advisors and Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel to Westlake. Morgan Stanley & Co. LLC and Barclays are acting as financial advisors and Jones Day is acting as legal counsel to Axiall. Weil, Gotshal & Manges LLP is acting as legal counsel to the Axiall board of directors. Westlake Chemical Corp. is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. Westlake’s range of products includes: ethylene, polyethylene, styrene, propylene, caustic, VCM, PVC suspension and specialty resins and PVC building products including pipe and specialty components, windows, fence, deck and film. The company was founded in 1986. Axiall Corp. is a leading integrated chemicals and building products company. Headquartered in Atlanta, Georgia, Axiall has manufacturing facilities located throughout North America and Asia. The company was founded in 1984.]]>