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Business deals

Japan's Toray to buy Dutch carbon-fiber processor TenCate

$1.13 billion deal will expand the No. 1 player's downstream operations

TenCate's carbon-fiber composite components are used in aircraft and rockets, as well as computers and sporting goods.

TOKYO -- Toray Industries is set to purchase a Dutch manufacturer of high-grade carbon-fiber composite components, with a keen interest in boosting automotive-related sales.

Toray is expected to pay around 120 billion yen ($1.13 billion) for the entire stake in TenCate Advanced Composites Holding. The deal with parent Royal Ten Cate will be the Japanese company's largest-ever acquisition.

TenCate boasts annual sales of 200 million euros ($247 million) and five plants in the Netherlands, the U.K. and the U.S. Making the most of its proprietary technologies for processing carbon-fiber composites quickly at low cost, the company manufactures components for a variety of products. Its clients include European aircraft manufacturer Airbus, U.S. space exploration venture SpaceX, Chinese personal computer maker Lenovo Group and American sportswear company Nike.

Toray is already the world's top producer of carbon fiber, with a market share over 40%. But the acquisition of TenCate will enable it to solidify its lead by creating a comprehensive production system covering materials to processing. The company believes acquiring TenCate will raise carbon-fiber composite sales related to the auto industry in particular, which currently account for just over a tenth of Toray's carbon-fiber business.

Toray has been building out its carbon-fiber business, starting with the $584 million acquisition of U.S. carbon-fiber maker Zoltek in 2014. The company has reached a deal with U.S. aircraft maker Boeing to become a supplier of carbon-fiber composites for the next-generation 777X jumbo jet. It has also renewed an exclusive supply contract with Boeing for the 787 aircraft.

Acquisitions of carbon fiber component makers in Italy, Germany and elsewhere have enhanced Toray's downstream operations, a trend the TenCate purchase advances further. The Japanese company targets 260 billion yen in sales from carbon fiber composite materials in the year through March 2020, 45% more than is forecast for the current fiscal year ending this month.

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