Mitsubishi Chemical Announces Acquisitions Strengthening Its Global Position as Supplier of Polypropylene Plastics in High Demand by Automobile Industry
Wednesday May 10, 7:01 pm ET
TOKYO--(BUSINESS WIRE)--May 10, 2006--Mitsubishi Chemical Corporation (MCC) today announced it has signed a contract with ExxonMobil Chemical Company (EMCC), the chemical division of Exxon Mobil Corporation (EMC), to purchase EMCC's stake in two joint ventures that manufacture and sell polypropylene compounds in high demand around the world for automobile components and other uses. Currently owned by both companies, the joint ventures under the agreement will become wholly-owned subsidiaries of MCC on June 1.
Demand for polypropylene (PP), a tough, lightweight and rigid plastic, is strong both inside and outside Japan, particularly as a raw material for automobile components such as bumpers, electrical and mechanical systems and interior trim panels. The market for PP compounds for automobiles is growing globally at an annual rate of 6 percent due to increases in the number of automobiles manufactured and sold and an increase in the volume of resin used for each vehicle.
The MCC group considers the PP business as one of its core business areas and is currently conducting the business chiefly through Japan Polypropylene Corporation (JPP), a joint venture with Chisso Petrochemical Corp. The group has a particularly strong reputation for high-grade products, including materials for automobile use. In order to respond to the increasingly global needs of customers in the automobile industry, MCC group has set up manufacturing and sales operations in Japan, North America, East Asia and China, establishing mechanisms for supplying products to customers' manufacturing operations in various regions throughout the world, and thereby has built trusting relationships. Furthermore, in recent years, customers increasingly demand the supply of materials of identical quality (global materials) no matter where they are in the world.
MCC group's move to wholly acquire the two MYTEX companies is a response to these needs and will allow MCC group to improve the integration of the automobile PP compound business implemented by the two companies with the domestic PP business conducted principally by JPP.
Managing Executive Officer Hiroshi Yoshida, commenting on the acquisition agreement, said: "This decision will allow MCC group to respond to the demands of our customers in the automobile industry for global materials, and will help raise the presence of MCC group in the globally expanding automobile resins market."
To strengthen the PP compound business, a stable global supply of high-quality polypropylene material is essential. To secure such a supply, MCC group will continue to cooperate with EMCC in North America and East Asia in addition to leveraging JPP's high value-added PP process license. These policies will allow the MCC group to establish mechanisms for providing high-quality global materials to the automobile industry.
MCC group currently has the right to market excess PP resins capacity from EMCC's Singapore subsidiary and sells them to the durables market via Mytex Polymers Asia-Pacific (MYTEX-AP). MYTEX-AP will now concentrate on PP compound business for automobile use and the above capacity right of MCC group will be relinquished concurrent with the acquisition of the two MYTEX companies. About MCC and EMC Mitsubishi Chemical Corporation (MCC, Headquarters: Minato-ku, Tokyo; President: Ryuichi Tomizawa). ExxonMobil Corporation (EMC, Headquarters: Irving, Texas; CEO: Rex W. Tillerson)
Source: Mitsubishi Chemical Corporation
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