Covestro is accelerating the expansion of its Thermoplastic Polyurethanes business (TPU) by raising its stake in Joint Venture, DIC Covestro Polymer (DCP) from 50% to 80%.
DCP, established as a 50/50 joint venture in 2000, is a leading company in the Japanese TPU industry, while the investment is part of Covestro’s expansion of its global TPU business. Total investment is described as ‘low double-digit million euros.’
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Both parties agreed to not disclose any further financial details of the transaction. Closing of the deal is planned for early second quarter of 2019, subject to the approval from the relevant authority.
“The strong and long-term partnership of both companies, as well as our thorough understanding of the future growth potential, make this acquisition a fitting step in Covestro’s growth strategy focussing on sustainability driven innovation”, said Covestro CEO, Markus Steilemann.
Covestro is a supplier of high-performance resins and globally a top three producer of TPU. The TPU business is part of the Coatings, Adhesives, Specialties (CAS) segment and accounted for around 10% of the segment sales in FY 2017. The global TPU industry is estimated to grow at a long-term average of 6% per annum, while Covestro outgrew the industry with double-digit core volume growth per year in the past three years.
Continued partnership, unique product and R&D capabilities
DIC Corporation (DIC) will continue to support DCP with its industry network, brand name and local partner. Production and R&D by DCP will continue at the Sakai plant located in the DIC facility in Sakai, Osaka Prefecture, receiving support from DIC such as supplying feedstocks and providing services on site.
DIC is also an important partner for Covestro in other Coatings, Adhesives and Specialities business. The acquisition complements Covestro’s recent organic global capacity expansions of TPU sites in New Martinsville (US) and Changhua (Taiwan), which raises the respective annual TPU production capacities by around 25% each.
“DCP’s unique local capabilities together with Covestro’s global network will form a powerful combination,” said Covestro Japan president, Kimiyasu Yonemaru.
“The differentiated product portfolio fits well into our pursuit to grow in more resilient, profitable businesses. It shows a clear commitment from Covestro to the Japanese market.”
