Covestro becomes majority stakeholder in DIC Covestro Polymer JV in Japan

Covestro announced that it has raised its stake in the Joint Venture DIC Covestro Polymer Ltd. (DCP) from 50 % to 80 %.

DCP was extablished in the year 2000, as a 50/50 joint venture between Dainippon Ink & Chemicals Inc. (today DIC Corporation) and Bayer Ltd. (the shares in DCP were later transferred to Bayer MaterialScience Ltd., today Covestro Japan Ltd.). Today, DCP is a leading TPU supplier in Japan offering a wide range of TPU speciality products and TPU brands such as Pandex, Desmopan and Texin.

According to Covestro, the investment is part of the expansion of its global Thermoplastic Polyurethanes (TPU) business. The total investment sums up to a low double digit million EUR amount. Both parties agreed to not disclose any further financial details of the transaction. The closing of the deal is planned for early Q2 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.

Kaoru Ino, Representative Director, President and CEO of DIC Corporation (right), and Dr. Markus Steilemann, CEO of Covestro. (Source: 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, said the company.

DIC will continue to support DCP with its industry network, brand name, and as a 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 CAS business. Covestro said that the acquisition complements its 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,” said Kimiyasu Yonemaru, President of Covestro Japan. “It shows a clear commitment from Covestro to the Japanese market.”