TOKYO -- Japanese chemical producer Kuraray is acquiring American activated-carbon titan Calgon Carbon in a deal exceeding $1.1 billion.
Kuraray will purchase all outstanding shares for $21.50 each, according to Thursday's announcement. It aims to close in December and turn the Pennsylvania company, the world's largest maker of activated carbon, into a wholly owned subsidiary.
The highly granular charcoal is used in water treatment and in scrubbing emissions from fossil fuel power plants. Global consumption comes to around 1.6 million tons a year, with sales of high-performance varieties growing at a 5-6% annual clip.
Calgon, strong in activated carbon derived from wood and coal, earned a net profit of some $13 million on sales of about $514 million in 2016. The company has plants in seven countries. Calgon not only sells activated carbon to its roster of international clients, but also offers its wealth of water treatment and other expertise.
Kuraray controls large global shares in such niche products as its trademark Eval plastic film, used for food packaging; industrial alcohols; and Isoprene for cosmetics production. The Japanese group will position activated carbon, another niche operation, as a core segment. Kuraray expects record sales and operating profit in the current year ending December.
Major consolidations are afoot in the global chemical industry, headlined by the recent merger that created DowDuPont. Agrochemical and industrial gas producers are also being acquired, especially in Europe.
Many Japanese chemical companies choose not to pursue scale for scale's sake, instead electing to build up technical competencies in specialized domains. Toray Industries and Mitsubishi Chemical have in recent years made acquisitions to expand their footprints in the carbon fiber sector, while Asahi Kasei has gone the same route with separators for lithium-ion batteries.
Kuraray has adopted the same strategy in niche materials. It will leverage Calgon technology and sales channels to develop water and energy infrastructure markets, especially in emerging economies.
"Activated carbon is often thought of as a stale technology, but it can be fully competitive by offering high added value," Kuraray President Masaaki Ito said at a news conference Thursday. "With water and the environment as strategic areas, we aim for higher reaches."