U.S. investment fund Apollo Global Management is set to purchase aluminum assets from Japanese materials producer Showa Denko in a deal expected to top 50 billion yen ($482 million).
This will be Apollo’s first Japanese acquisition since the company opened its offices here in 2018. The transaction is due to close by June.
Apollo has been busy expanding its portfolio in the materials sector, while Showa Denko is working to offload assets as part of a restructuring effort.
The Japanese company will sell its aluminum rolled products division, which makes aluminum used in electronic components, along with the aluminum can division. Showa Denko retains its aluminum specialty components division, which makes parts for the automotive industry.
The high purity aluminum foil produced by the Company has strength in high-end products with high capacity and high strength, and the Company has the number one market share of sales in the global high purity aluminum foil for aluminum electrolytic capacitor market. In 2013, the Company established Showa Denko Aluminum (Nantong) Co., Ltd.in Nantong, China, and has built a manufacturing and sales system of stable supply of high quality, high purity aluminum foil for the rapidly growing Chinese market.
In light of the rapidly changing business environment, the Company has been examining the optimal allocation of management resources and portfolio management to realize sustainable growth.After careful consideration of all available options, the Company reached the conclusion that the expansion of the aluminum can business and the aluminum rolling business would be best achieved through business partners that have specialized knowledge and management resources to enable future growth of these businesses together with the employees engaged in the respective business. Taking these factors into consideration, the Company decided to execute the transactions set forth in the Master Agreement with Apollo, which is one of the world’s leading alternative investment managers and has a wealth of experience supporting aluminum-related industries for more than 20 years.
Altogether, the aluminum business produced sales of $935 million in 2019, generating $16.3 million in operating profit.
Apollo, which holds $433 billion in assets under management, is a private equity heavyweight on par with KKR and the Carlyle Group.