Japan’s Teijin Ltd (TYO: 3401) has agreed to acquire Michigan-based Continental Structural Plastics Holdings Corp. (CSP), a leading automotive composite supplier in North America, from a private equity investment group led by Scott Capital and previously led by Richard L. Scott Investments LLC, for USD $825 million.
The deal marks Tokyo-based Teijin’s biggest acquisition ever. Through this acquisition, Teijin plans to set the stage for an automotive composite products business in North America, and to accelerate its expansion as a tier 1 supplier of high-performance composites to the global automotive market.
The deal is expected to close in December 2016 subject to customary closing conditions, including regulatory approval. Upon closing, CSP will become a wholly owned subsidiary of Teijin.
The move comes as Akron, Ohio-based global plastic compounds and resins manufacturer A. Schulman Inc. (NASDAQ: SHLM) said it has retained investment bank Citigroup to explore strategic alternatives.
CSP is a leading manufacturer of thermoset composites in the automotive, heavy truck, HVAC and construction industries, and is the world’s largest sheet molding compound (SMC) manufacturer for automakers. Since its establishment in 1969, CSP has provided leading-edge technologies in lightweight materials and composite solutions such as glass fiber reinforced plastic (GFRP) for the automotive industry.
Headquartered in Auburn Hills, Michigan, CSP provides full-service engineering support, and holds more than 50 patents covering materials development and manufacturing processes in composite materials formulation and design. Its Class A surfaces produced by its SMC technology have been adopted by various automakers in the US, Europe and Japan. The company has 14 facilities in the US, Mexico, France and China and approximately 3,200 employees. It posted consolidated sales of over USD $634 million in 2015.
Richard L. Scott Investments LLC, a Naples, Florida-based private equity firm of businessman and politician Rick Scott, acquired CSP in February 2005. In 2008, under his ownership, CSP acquired the Budd Plastic division from Thyssen Krupp, making CSP the largest industrial composites molder in North America. He is listed as the CEO at his eponymous private investment firm from 1997 to the present, according to his LinkedIn page. He was previously the founder and former chairman and CEO of Columbia/HCA Healthcare Corp, one of the world’s largest healthcare services companies.
In 2011, Rick Scott, a member of the Republican Party, became the 45th Governor of Florida.
The investment management of CSP was then transferred to a family office spinoff, G. Scott Capital Partners LLC, based in Rowayton, Connecticut, led by Gregory D. Scott – no relation to Gov. Scott. From 2000 to 2012, prior to founding Scott Capital, Greg Scott and his team worked at Rick Scott’s private investment firm. According to a Form D filed with the SEC on May 29, 2014, G. Scott Capital Partners I LP had privately raised $21 million. In July 2014, CSP acquired the composite operations of Magna Exteriors.
Teijin is a technology-driven global group offering advanced solutions in the areas of sustainable transportation, information and electronics, safety and protection, environment and energy, and healthcare. Its main fields of operation are high-performance fibers such as aramid, carbon fibers & composites, healthcare, films, resin & plastic processing, polyester fibers, products converting and IT.
The group has some 150 companies and around 16,000 employees spread out over 20 countries worldwide. It posted consolidated sales of JPY 790.7 billion (USD $7.4 billion) and total assets of JPY 823.4 billion (USD $7.7 billion) in the fiscal year ending March 31, 2016.
“We are confident that the platform for automotive composite products business we will gain through the acquisition of CSP’s complementary technical expertise in thermoset composites and GFRP know-how will trigger further development of our integrated high-performance materials business, one of our key strategic fields,” said Teijin’s president and CEO Jun Suzuki.
Teijin will benefit from CSP’s established sales channels in the North American automotive market, which will enable the combined business to provide a broader range of solutions that meet automakers’ demands for weight reduction and durability, utilizing the company’s thermoplastic composite technologies.
The combination of CSP’s thermoset capabilities, especially its GFRP technology, and Teijin’s high-performance composites such as carbon fiber reinforced thermoplastic (CFRTP), will help reduce weight and component count in finished products. This will in turn improve recycling efficiency and offer automakers value-added solutions that meet their requirements for more environmentally friendly components at lower cost, the company says.
Teijin will also utilize CSP’s European Center for Advanced Technology in France and Teijin’s own composite production facilities to enhance its global development capabilities, allowing the combined business to better address the requirements of European, Japanese and Asian automakers. The automotive composite products business of the Teijin Group is targeting annual sales of USD $2 billion by 2030.
Teijin is implementing a solutions-oriented business model as part of its long-term management vision, with development of composite applications for mass-produced automotive components one of its priorities in the field of high-performance fibers.
Environmental concerns such as CO2 emission reductions and improvements in fuel efficiency are now global issues; accelerated development of tough and lightweight eco-friendly composite components is therefore a pressing task in the automotive industry. Teijin is now focused on establishing a platform for business development in automotive composite products, aiming to provide a wider range of solutions for automakers.
Teijin established a Composites Innovation Center in 2008 and has focused on developing leading-edge composite product technologies and applications. In 2011 the company developed the world’s first mass-production technology for CFRTP, with a production interval time – or “takt-time” – of just one minute.
Teijin subsequently established a technical facility in the US and a pilot plant for the fully integrated production of CFRTP in Japan. In 2012 it branded the world’s first CFRTP product – Sereebo™ – and has been preparing this for commercial use via high-volume production methods in collaboration with domestic and international enterprises.
Meanwhile, Toho Tenax Co., Ltd., the core company of the group’s carbon fibers and composites business, has developed an integrated production system for carbon fiber-reinforced plastic (CFRP) using its Tenax® Part via Preform (PvP) technology that considerably reduces carbon-fiber waste compared to conventional preform production methods.
Teijin obtained ISO/IEC 17025 accreditation for its evaluation capabilities in 2015 and ISO/TS 16949 accreditation for automotive production and relevant service part organizations in 2016.
Photo: Governor of Florida, Rick Scott.