Mitsubishi to Finance Bid for Chemical Firm in U.S. : Takeovers: The $850-million deal for Aristech may be the first time a Japanese company has taken an equity position in a U.S. leveraged buyout.
Mitsubishi Corp., one of Japan’s leading general trading companies, announced Wednesday that it intends to finance an $850-million acquisition bid for Pittsburgh-based Aristech Chemical Corp.
It appeared to be the first time that a Japanese firm has taken an equity position in a leveraged buyout in the United States.
Mitsubishi is affiliated with Mitsubishi Estate Co., the real estate giant that acquired a controlling interest in New York’s Rockefeller Center at the end of October as the core company in a giant industrial and financial conglomerate.
But this time the name Mitsubishi is associated with the relatively benign role of the corporate “white knight” rather than with the more controversial role of the bold and conspicuous investor.
The management of Aristech, a former unit of U.S. Steel that makes polymers and basic chemicals, approached the Japanese trading firm last November asking for help in warding off an unwanted takeover bid by an industrial rival, Huntsman Chemical, Mitsubishi officials said.
The two companies had became familiar with each other several years ago when they discussed the possibility of starting a joint venture that would give Mitsubishi a base in the U.S. chemical industry, the officials said.
In the current deal, Mitsubishi said, it will finance a management-led acquisition tender of $26 a share for all outstanding Aristech stock. It will provide $200 million from internal cash and obtain another $650 million in bank loans secured on Aristech’s assets.
In the United States, Aristech was reported to have confirmed that Mitsubishi would be an equity participant in the deal. According to reports in the Japanese press today, Aristech will hold 12.5% of the acquired shares, and Mitsubishi will hold the remaining 87.5%.
Shunichi Maeda, the assistant general manager of Mitsubishi’s mergers and acquisitions team, denied a report in Wednesday’s edition of the Nihon Keizai Shimbun, Japan’s leading economic newspaper, that the trading company intends to spin off units of the U.S. company to pay for its investment.
“We are not a financial buyer but a strategic investor,” Maeda told foreign reporters.
None of Japan’s chemical manufacturers has established a base of operations in the United States. The Aristech deal, if it succeeds, will give the Mitsubishi group a strategic advantage over its domestic rivals in a fiercely competitive industry.
Mitsubishi officials had high praise for Thomas Marshall, Aristech’s chairman and chief executive. Makoto Okabe, Mitsubishi’s assistant manager for corporate strategy, described Marshall as an “honorable gentleman,” and added: “We don’t believe he’s the kind of person who would just buy and sell a company for the purposes of making money.”
Mitsubishi billed itself in a statement to the press as “Japan’s largest integrated trading company,” with total trading transactions of $118 billion in the fiscal year ended March 31, 1989.
