Covestro accelerates the expansion of its Thermoplastic Polyurethanes business (TPU) by raising its stake in the Joint Venture DIC Covestro Polymer Ltd. (DCP) from 50 to 80%. DCP, established as a 50/50 joint venture in the year 2000, is a leading company in the Japanese TPU industry. The investment is part of Covestro’s expansion of its global TPU business. The total investment sums up to a low double digit million EUR. Both parties agreed to not disclose any further financial details of the transaction. Closing of the deal is planned for early second quarter 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 focusing on sustainability driven innovation”, said Dr. Markus Steilemann, CEO of Covestro.
Covestro is a leading supplier of high-performance resins and globally a top 3 producer of TPU. The TPU business is part of the Coatings, Adhesives, Specialties (CAS) segment and accounted for approximately 10% of the segment sales in FY 2017. The global TPU industry is estimated to grow at a long-term average of 6% p.a., 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 the success of DCP with its industry network, strong brand name, and as a reliable local partner. Production and R&D by DCP will continue at Sakai plant located in the DIC facility in Sakai, Osaka Prefecture, getting 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 Specialties business. The acquisition complements Covestro’s recent organic global capacity expansions of TPU sites in New Martinsville (USA) and Changhua (Taiwan), which raises the respective annual TPU production capacities by approximately 25% each.
“DCP’s unique local capabilities together with Covestro’s global network will form a powerful combination going forward. The differentiated product portfolio fits well into our pursuit to grow in more resilient, profitable businesses,” says Kimiyasu Yonemaru, President of Covestro Japan. “It shows a clear commitment from Covestro to the Japanese market.”