Mitsui Chemicals

Mitsui and Takeda in a Urethane Chemicals Joint Venture

September 27, 2000

Japan's leading chemical makers Mitsui Chemicals, Inc. and Takeda Chemical Industries, Ltd. have basically agreed upon establishing a joint venture company by merging the two parties' urethane chemicals and composite materials businesses. Formation of the JV is subject to approval by the Japanese Fair Trade Commission.

The new company, to be called "Mitsui Takeda Chemicals Inc." (MTCI) and scheduled to begin its business operation in April 2001, will engage in the manufacture, sale and research of urethane raw materials, urethane derivatives, composite materials and organic acids. Its capitalization will be fixed at 40 billion yen, with Mitsui contributing 51% and Takeda 49%. In addition, Mitsui is scheduled to take over Takeda's share in MTCI five years after the start of JV's commercial operation.

Aside from its head office to be located in Tokyo, the company will have three sales offices, five works and three research sites throughout Japan. Mr. Ken-ichi Nishino, currently Takeda's Board Director and President of Chemical Products Company, has been nominated to become the JV's first president leading an organization 1,000 members strong. MTCI's production capacities for the various products, in metric tons per year, will be: TDI : 175,000; MDI : 60,000; PPG : 135,000; Urethane derivatives : 30,000; Composite materials : 70,000; and Organic acids : 40,000.

The foremost objective of the joint venture this time is in creating a player assured of a top maker's firm and solid position in the Asian market for urethane chemicals. At the same time, cost reduction in terms of production, logistics and sales, as well as synergy in research are also anticipated.

The two companies have been prompted by a strategic fit of interest in entering into the arrangement this time. Seeing the U.S. and European chemical concerns bolstering their competitive strengths through various alliances, Mitsui has been strongly motivated to boost the profitability of urethane chemicals constituting one of its core businesses and to thereby compete on an equal footing. Takeda, on the other hand, has been in search of ways for its urethane chemicals and composite materials business to achieve an autonomous future development.

MTCI is projected to achieve sales of roughly 110 billion yen for the first year of its business operation (Fiscal 2001 starting April 1, 2001). In Fiscal 1999, Mitsui and Takeda independently recorded sales of some 54 billion yen and 51 billion yen, respectively, for their urethane chemicals business.