Mitsui Chemicals, Inc. (TYO:4183) announced on Monday that it signed an agreement to acquire semiconductor materials manufacturer JSR from JIC Capital for 1.8 trillion yen ($11.6 billion). The acquisition aims to broaden the company's product portfolio within the semiconductor sector. The venture capital arm of the Development Bank of Japan (DBJ) will contribute 200 billion yen toward the deal, according to a statement released by Mitsui Chemicals, Inc.
Acquisition Deal Structure and Financing Plan
Mitsui Chemicals, Inc. will make a cash payment of 1.84 trillion yen for JSR. The company plans to fund 1.64 trillion yen of the purchase price through bridge loans secured from major banks. The remaining 200 billion yen will come from DBJ in the form of an equity investment. Following the completion of the transaction, Mitsui Chemicals, Inc. expects its ratio of debt to core earnings to temporarily rise above 4.0. To maintain its credit rating, the enterprise plans to restructure the bridge financing within one year after closing the deal.
Market Performance and Post-Merger Financial Goals
Following the transaction announcement on Monday, shares of Mitsui Chemicals, Inc. lost early market gains and closed down approximately 14 percent. The stock had previously fallen roughly 12 percent on Friday after Reuters first reported on the pending agreement. Mitsui Chemicals, Inc. stated that the combined entity will become the largest manufacturer of semiconductor materials in Japan based on sales volume. Additionally, the integrated company aims to generate approximately 40 billion yen in additional annual profit by 2035.
