Mitsubishi Plastics Inc. and executives of Swiss engineering plastic parts maker Quadrant AG have launched a joint 14.6 billion yen ($147 million) buyout of Quadrant, and plan to use it as a platform to expand their businesses internationally.
Tokyo-based Mitsubishi said the plan, announced May 4, would boost its relatively small sales in engineering plastic parts outside of Japan, while Zurich-based Quadrant said it would gain improved access to Asia and save money by delisting from the Swiss stock exchange.
The deal hinges on regulatory approval, which the bidders expect, and on existing Quadrant shareholders voting for the privatization plan, according to a jointly issued news release.
Quadrant executives involved in the bid said they and Mitsubishi own about 32.7 percent of Quadrant, and need nearly 66.7 percent for the deal to be completed.
The offer prices Quadrant at a 58 percent premium over its average stock price of the last 60 days, and is likely to be completed this summer, the release said. Quadrant's independent directors are supporting the offer.
Quadrant Chairman Adrian Niggli said the deal would give his company better access to Mitsubishi research and development and raw materials, leading to more innovation.
Niggli said in an email to Plastics News that the buyout is being funded by Mitsubishi but Quadrant will operate independently, and no management changes are planned. He said the firms do not expect any other bidders.
Marco Forster, Quadrant board vice president, said having the backing of strong shareholders such as Mitsubishi is important in the current economic climate.
An alliance with a prime industrial partner having a long-term view is a better option for Quadrant's stakeholders than being raided by pure financial investors, the bidders said in a written presentation.
Mitsubishi officials said Quadrant's technology and R&D channels would help it boost overseas sales to 40 percent of its business by 2012. The companies also hope to expand their partnership in the injection molding business in Europe and the U.S.
Mitsubishi and Quadrant have a long-standing partnership in Japan Nippon Polypenco Ltd. making engineered plastic parts and as part of the deal, Quadrant would increase its ownership in that venture to 55 percent.
Mitsubishi and the Quadrant executives formed a 50-50 partnership, Aquamit BV, to jointly run their alliance and complete the buyout. That company will become part of Mitsubishi if the privatization is complete.
Quadrant has a global network of 19 plants and 2,400 employees making semifinished and finished plastic products. Mitsubishi Plastics employs about 6,700 and is part of the much larger Mitsubishi Chemical Holdings Corp.