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Thursday, 28 September 2017, 08:00 HKT/SGT
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Source: Showa Denko K.K.
SDK Obtains Competition Authorities' Approval for SGL GE Acquisition and Decides to Transfer U.S. Business to Tokai Carbon

TOKYO, Sept 28, 2017 - (JCN Newswire) - Showa Denko ("SDK"; TSE:4004) has obtained approval from all required competition authorities, including Germany and the United States, for its acquisition of SGL GE Holding GmbH (SGL GE) effective September 27, 2017 (US time). The transaction was announced earlier in our news release of October 20, 2016 entitled "Acquisition of the Graphite Electrode Business of SGL Carbon SE."

The U.S. competition authorities approved the acquisition on condition that SGL GE's graphite electrode business in the U.S. is sold, and SDK decided at its board meeting today to transfer that business to Tokai Carbon Co., Ltd. (Tokai Carbon), which the U.S. competition authorities have approved as the purchaser, after the closing.

SDK expects to acquire all shares in SGL GE on October 2, 2017. Soon after the acquisition, SDK will conclude an agreement with Tokai Carbon concerning the transfer of SGL GE's U.S. business. The business transfer will be completed in early November 2017.

By making SGL GE a subsidiary, SDK will obtain graphite electrode production bases in Europe and Southeast Asia, in addition to the existing bases in Japan, USA and China. As a result, SDK will become the leading supplier of graphite electrodes and will aim to further strengthen and expand the business. Showa Denko Carbon, Inc., SDK's subsidiary in the U.S., expects to increase the operating rate of its new facilities and reduce costs. SDK will also aim to quickly achieve the effect of global-scale integration of SGL GE with existing operations, thereby strengthening cost competitiveness. Thus, SDK will work to increase durability of the business and pursue further growth under the fiercely competitive business environment.

SDK will separately announce the final price for the SGL GE acquisition and the influence of the acquisition on SDK's fiscal 2017 performance as soon as the details are finalized.

1. Outline of business transfer

(1) Business to be transferred
Name: SGL GE Carbon Holding LLC
Location: 160, Greentree Drive Suite 101, Dover, DE, USA
Representative: Scott L. Carlton, President
Business: Production, sale, and R&D of graphite electrodes in the U.S.
Capital stock: $100
Establishment: February 3, 2016
Sales (2016): $80.8 million
Production capacity: 30,000 t/year [Hickman (early part of the process) and Ozark (latter part of the process) combined] (Accounting for 20% of SGL GE's total capacity of 150,000 t/year)
Employees: Approx. 140

Note: The above sales amount is based on a simple addition of indexes for SGL GE Carbon Holding LLC and its affiliates.

(2) Transfer method, enterprise value, and price

After SDK's acquisition of all SGL GE shares, SDK will transfer all shares in SGL GE Carbon Holding LLC (SGL GE's subsidiary for running its business in the U.S.) to Tokai Carbon. The enterprise value of the U.S. business is estimated at 16.5 billion yen and the share transfer price will be 12.9 billion yen (based on the exchange rate of 110 yen to the dollar).

Note: The price may change depending on the amount of actual assets, etc. at the time of share transfer.

2. Schedules

Sept. 28, 2017 Decision of SDK's board of directors
Oct. 2, 2017 SDK expects to acquire all shares in SGL GE.
Oct. 2, 2017 SDK and Tokai Carbon expect to conclude an agreement concerning the transfer of SGL GE Carbon Holding LLC shares.
Early Nov. 2017 All SGL GE Carbon Holding LLC shares will be transferred to Tokai Carbon.

3. Outline of the buyer

Name: Tokai Carbon Co., Ltd.
Location: 2-3, Kita-Aoyama 1-chome, Minato-ku, Tokyo
Representative: Hajime Nagasaka, President and CEO
Business: Production and sale of carbon black, graphite electrode, fine carbon, friction materials, and industrial furnace & related products
Capital stock: 20,436 million yen
Establishment: April 1918
Total assets (consolidated) (as of June 30, 2017): 158,903 million yen
Net assets (consolidated) (as of June 30, 2017): 118,561 million yen
Major shareholders and shareholding ratio (As of June 30, 2017):
- The Master Trust Bank of Japan, Ltd. (Trust Account) 10.57%
- Japan Trustee Services Bank, Ltd. (Trust Account) 7.03%
- The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3.53%
- Mitsubishi Corp. 3.00%
- Mitsubishi UFJ Trust and Banking Corporation (Standing proxy: The Master Trust Bank of Japan, Ltd.) 2.79%
- The Master Trust Bank of Japan, Ltd. (Mitsubishi Chemical Corp. Retirement Benefit Trust Account) 2.62%
- DFA INTL SMALL CAP VALUE PORTFOLIO (Standing proxy: Citibank, N.A., Tokyo Branch) 2.13%
- Deutsche Bank AG, Frankfurt (Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Department) 2.00%
- Japan Trustee Services Bank, Ltd. (Trust Account 9) 1.80%
- Tokio Marine & Nichido Fire Insurance Co., Ltd. 1.61%

[Reference]
Outline of SGL GE
Name: SGL GE Holding GmbH
Location: Werner-von-Siemens-Str. 18, 86405 Meitingen, Germany
Representative: Klaus Unterharnscheidt, Managing Director
Business: Production, sale, and R&D of graphite electrodes
Establishment: December 11, 2015
Production bases: Six plants [in Germany, Austria, Spain, USA (two sites), and Malaysia]
Employees: Approx. 900

Press release (PDF): www.sdk.co.jp/assets/files/english/news/2017/20170928_sdknewsrelease_e.pdf


About Showa Denko K.K.

Showa Denko K.K. ("SDK"; TSE:4004, US:SHWDF) is a major manufacturer and marketer of chemical products serving a wide range of fields ranging from heavy industry to the electronic and computer industries. The Petrochemicals Sector provides cracker products such as ethylene and propylene, the Chemicals Sector provides industrial and high-performance gases and chemicals and high-purity gases and chemicals for the semiconductor industry, and the Inorganics Sector provides ceramics products such as alumina, abrasive, refractory and graphite electrodes and fine carbon products. Today, the Aluminum Sector provides aluminum materials and high-value-added fabricated aluminum, the Electronics Sector provides HD media, compound semiconductors such as ultra high-bright LEDs and rare earth magnetic alloys, and the Advanced Battery Materials Department (ABM) provides lithium-ion battery components. For more information, please visit www.sdk.co.jp/english/.

Contact:
Public Relations Office
Phone: 81-3-5470-3235


Sept 28, 2017 08:00 HKT/SGT
Source: Showa Denko K.K.

Showa Denko K.K. (TSE: 4004)

Topic: Press release summary
Sectors: Electronics, Chemicals
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