DSM and MCC sign contracts to exchange polycarbonate and polyamide businesses

DSM Engineering Plastics, a business group of the Netherlands-based Life Sciences and Materials Sciences company Royal DSM N.V., at the end of last week announced that it has signed the contracts with Mitsubishi Chemical Corporation (MCC) enabling DSM to acquire MCC's Novamid® polyamide business in exchange for DSM's Xantar® polycarbonate business.

In May 2009 both companies already announced the signing of a memorandum of understanding for the intended swap. The transaction is subject to various external approvals. Closing is expected in Q2 2010.

For both companies the businesses they will add to their portfolios as a result of the intended swap of activities provide a strong strategic fit. DSM Engineering Plastics will be able to further reinforce its position as one of the globally leading producers of polyamide engineering plastics and expand its position in Japan, an important market where innovation and sustainability are driving growth. The intended swap will enable DSM Engineering Plastics to strengthen the service and innovation capabilities it offers to its customers in the automotive industry, the electrical market and the flexible packaging market, not only in Europe and the United States but also in Asia, especially in Japan and China. The intended swap will also include MCC's PA 6.66 business and manufacturing, as well as a number of patents in the field of automotive exterior and other application areas, thereby broadening DSM Engineering Plastics‘ portfolio.

Following the intended acquisition of the Novamid® business, DSM will also be able to add additional value to Japanese customers with overseas operations through its innovative technology and local service and product delivery. As part of the agreement, DSM will acquire Tai Young Nylon Co., Ltd. in Kaohsiung, Taiwan, R.O.C., with local polymerization capacities for PA6.66.

MCC will be able to fortify its global position in polycarbonate through the addition of DSM's innovative and high-end polycarbonate Xantar® business, which is mainly focused on the European market.

In the agreement it is envisaged that DSM will compound polycarbonate in Genk (Belgium) for MCC and in turn MCC, through its MEPCOM Kyushu joint venture, will compound polyamide in Kurosaki (Japan) for DSM. MCC will also continue PA polymer production in Kurosaki on behalf of DSM.

As MCC will close its caprolactam production unit in March 2010, DSM will secure the supply of caprolactam to the polymer plants in Japan and Taiwan from its own global network, having a fully backward integrated supply chain for polyamide across three continents.

DSM and Mitsubishi have agreed to provide several services to each other as the new owners of the businesses, including R&D support, in order to secure an efficient transfer and continuation of the services to the respective customer bases.

A number of key employees of DSM's polycarbonate business will transfer to MCC and number of MCC employees will be seconded to DSM. It is also envisaged that MCC will establish an R&D unit at the Chemelot Research and Technology campus in Geleen (Netherlands).

Roelof Westerbeek, President of DSM Engineering Plastics, said: "The signing of the contracts is an important step forward for DSM and MCC. Through this acquisition, our current customers will benefit from our expanded presence in Japan and from more innovative products, while MCC's customers will profit from DSM's global network and extensive portfolio of products. In the coming months we will prepare a smooth transfer of the businesses, ensuring that services to our customers will be uninterrupted. We are very excited to expand our position in Japan, a large and important market for us where innovation and sustainability are driving growth.”

More Information: www.dsmep.com