23 October 2000 00:00 [Source: ICB Americas]Acordis plans to sell Twaron Products, its aramid fiber business, to Teijin because of the high cost of expanding the business to keep up with demand. The companies expect to reach an agreement by December. The takeover will mean that Teijin, number three in the global market for aramid fiber behind number-two Twaron, and the market leader DuPont will be the world's only producers of the material.
Teijin, which has an aramid fiber capacity of 1,400 tons per year, is expected to increase Twaron's nameplate of 11,000 metric tons per year at three plants in the Netherlands. Twaron has annual sales of around á200 million ($170 million).
Acordis, which since January has been 64 percent owned by the investment company CVC Capital Partners, wants to build up its specialty high performance businesses. But last week it revealed that additional capacity for Twaron, costing around $100 million, is urgently needed because of a surge in demand for the product as a reinforcement in optical fibers.
"We are now sold out of Twaron, which is two years earlier than we expected," says an Acordis spokesman. "We are not in a position to commit ourselves to the substantial investment necessary to expand capacity. It is clearly in the best interests of the business that it should be taken over by Teijin, which has wanted to acquire Twaron for many years."
DuPont recently expanded its capacity for Kevlar aramid fiber, giving it well over half of a world market that is expected to reach 30,000 tons this year.
"This transaction is a key step in Teijin's strategy to build a truly global business [in aramid fibers]," says Shosaku Yasui, president and CEO of Teijin. "The acquisition is part of our basic strategy to expand and diversify our product line in certain core business areas."
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