Japan's Tokai Carbon to Acquire German Carbon and Graphite Manufacturer - COBEX

As per the company's official notification, Tokai Carbon has signed the share purchase agreement to acquire 100% shares in a German manufacturer of carbon and graphite products, COBEX HoldCo GmbH ("COBEX") to make the company its subsidiary.
COBEX has three lines of business: Cathodes for smelting aluminum, Furnace linings used for linings of blast furnace, which is one of the major equipment of an integrated steel mill, and Carbon electrodes for smelting silicon metal.

With COBEX's acquisition, Tokai Carbon is set to enter into the world market as a key player in each of the aforementioned three businesses including business related to aluminum which is forecasted to achieve higher growth than steel.

Incorporating COBEX into Tokai Carbon as its seventh business will certainly contribute to diversification of the company's business portfolio and enhancement of its business in Europe (securing production facilities in Eastern Europe) as well as the expansion of the company's business scale and the improvement/stabilization of the profitability, which will lead to enhancement of their enterprise value.

The COBEX's core business of cathodes for smelting aluminium is expected to achieve stable growth as the aluminum market, the end market of the cathode business, is likely to grow steadily due to factors such as further light-weighting demand in the transportation equipment sector including automotive and aerospace, growing demand for construction materials amid the on-going urbanization, which leads to increase in utilization of aluminum, increase in utilization of aluminum for beverage containers and substitute demand for copper in the electronics sector.

Crude steel production in the world is expected to remain flat or slightly increase. Demand for furnace linings is likely to achieve stable growth as it essentially depends on the trend of projects in the steel market and approximately 90% of the demand is due to renewal investment. Demand for carbon electrodes is forecasted to remain firm and steady as silicon metal market is also expected to grow steadily even though its market size is relatively small.

Tokai Carbon is engaged in the manufacture and sale of carbon-related products. It operates through the segments such as Carbon Black, Graphite Electrode, Fine Carbon, Industrial Furnaces and Related Products, and Others. The other segment includes friction materials, negative electrodes, and property leasing. The company was founded on April 8, 1918 and is headquartered in Tokyo, Japan.