Sector News

ChemChina interested in Germany's SGL Carbon

May 31, 2016
Chemical Value Chain

ChemChina is interested in buying SGL Carbon, Manager Magazin reported on Friday, one of a growing number of Chinese companies seeking to acquire key German industrial technology.

Shares in SGL Carbon, which makes graphite electrodes for scrap metal recycling, jumped to a four-month high, trading 11.2 higher at 11.75 euros by 1045 GMT, valuing the company at just over 1 billion euros ($1.12 billion).

SGL has been seeking a buyer for its graphite-electrode business, which has struggled since Chinese semi-finished steel became cheap enough to compete with scrap, sending demand for recycling equipment plunging.

China is the world’s biggest steel producer and consumer.

SGL has warned that its operating income will fall markedly this year as prices at its graphite electrode business fall.

A spokesman for SGL declined to say whether ChemChina was a possible buyer for the graphite electrode business but said that SGL was not seeking to sell the group as a whole.

A person familiar with the matter said only the sale of that business was under consideration.

Manager Magazin said that ChemChina would rather buy the whole company.

Graphite electrodes are SGL’s biggest business. SGL also makes other graphite products for the chemical, semiconductor, energy and automotive industries.

Manager Magazin said ChemChina Chairman Ren Jianxin had held talks with SGL Chief Executive Juergen Koehler and with Quandt family heiress Susanne Klatten, who owns 27 percent of SGL.

ChemChina could not be reached for comment.

A spokesman for Susanne Klatten declined to comment on whether ChemChina approached Klatten about buying a stake in SGL Carbon, but said: “As an international businesswoman, Mrs Klatten regularly talks to international investors.”

SGL Carbon has a free float of just 37 percent.

Apart from Klatten’s stake, BMW owns 18 percent of the company, Volkswagen has 10 percent and family-run engineering firm Voith owns more than 5 percent.

SGL would be the latest in a series of German industrial groups to be targeted by Chinese buyers as the world’s second-largest economy makes the transition from a low-cost factory location into a high-tech industrial hub.

China is approaching a point where it can use major steel recycling facilities as materials used in a construction boom start to reach the end of their lifetime. The government is pushing to raise the amount of steel recycled in the country.

State-owned ChemChina has also agreed to buy German plastics-processing machinery maker KraussMaffei Group for 925 million euros.

It is also seeking to buy Swiss pesticides maker Syngenta in a $43 billion deal.

By Maria Sheahan and Edward Taylor

Source: Reuters

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