Covestro has increased its stake in the joint venture DIC Covestro Polymer (DCP) from 50% to 80% in an effort to accelerate expansion of its thermoplastic polyurethane business (TPU). DCP was established in 2000 and is a 50% joint venture.
The investment is part of Covestro's expansion of its global TPU business. The total investment amounts to 10 million Euros. The parties undertake not to disclose any financial details of the transaction. The transaction is scheduled to be completed early in the second quarter of 2019, subject to approval by the relevant authorities.
"The two companies' long-standing strong partnership and mutual understanding of future growth have made this acquisition a good step in Covestro's strategy for sustainable innovation and growth," said Dr. Markus Steilemann, CEO of Covestro Speaking.
Covestro is a supplier of high-performance resins and one of the top three manufacturers of TPU in the world. The TPU business is part of the Coatings, Adhesives and Specialties business, with sales accounting for about 10% of fiscal 2017 sales. The global TPU industry is estimated to grow at a long-term average annual growth rate of 6% per year. However, Covestro has grown at double-digit annual performance over the past three years, and the growth rate exceeds the industry average.
Continuous partnership, unique product and R & D capabilities
DIC will continue to support DCP's success through its business network, strong brand, and reliable local partners. DCP's production and research and development will continue at DIC's Sakai plant in Osaka and will continue to receive support from DIC. Such as providing raw materials and field services. DIC is also an important partner of Covestro in other businesses such as coatings, adhesives and specialty products. The acquisition is another recent expansion of Covestro's global TPU plant capacity in addition to New Martinsville (USA) and Changhua (Taiwan), which has increased its respective TPU production capacity by approximately 25% each year.
"DCP's unique local capabilities and Covestro's strong global network will form a powerful combination that goes hand in hand. The differentiated product portfolio is very suitable for our business growth model that pursues more flexibility and profit," said Covestro Japan President Kimiyasu Yonemaru said. "It shows Covestro's clear commitment to the Japanese market."