Announcement of the Contract Conclusion to Transfer Showa Denko Materials’ Ceramics Business

January 11, 2022

Showa Denko Materials Co., Ltd.

Showa Denko Materials Co., Ltd. (President and CEO: Hidehito Takahashi; hereinafter “Showa Denko Materials”) announces the conclusion of a contract to transfer its ceramics business (hereinafter “the Business”) to Japan Fine Ceramics Co., Ltd. (Representative Director and President: Hiroshi Tanaka; hereinafter “Japan Fine Ceramics”), a consolidated subsidiary of JGC Holdings Corporation, effective December 28, 2021. Showa Denko Materials previously announced in its July 7, 2021 news release that it had launched transfer negotiations with Japan Fine Ceramics, and the two companies have now reached an agreement.
Showa Denko Materials plans to establish a new wholly owned subsidiary by March 2022 that will take over the Business through an absorption-type split (hereinafter “the Company Split”) on July 1, 2022, and to transfer all shares of the new company to Japan Fine Ceramics on the same date.

Showa Denko Materials has operated the Business for roughly 90 years since it first began to manufacture and sell porcelain insulators in 1931. The Business currently offers high-density silicon carbide (SiC) ceramics “Hexoloy,”^※1 alumina ceramics “Halox,”^※2 and zirconia toughened alumina ceramics “Halox-Z”^※3 for such applications as automobiles, semiconductors, and industrial machinery. With properties meeting various needs, these products have been adopted for automobile engine coolant pump seals^※4 and precision positioning parts for equipment used in the semiconductor manufacturing process, among others.

Showa Denko Materials is scheduled to integrate with Showa Denko K.K. in January 2023, and is now working to maintain sustainable growth by optimally allocating its management resources, reorganizing its business portfolio, and creating innovations through the combination of the two companies’ technologies. During this process, Showa Denko Materials carefully considered various ways to continuously expand the Business and enhance its business value, and eventually determined that the best option would be to have Japan Fine Ceramics, a manufacturing company specializing in fine ceramics, operate the Business. In this way, Showa Denko Materials began to negotiate the business transfer with Japan Fine Ceramics, with full confidence that the value of the Business could be maximized by combining the ceramics technologies and achievements of both companies.
The impact of the transfer of the Business on Showa Denko Materials’ performance is expected to be minor.

 

• ※1 Hexoloy refers to pressureless sintered alpha silicon carbide ceramics. Noted for its superior corrosion resistance, rigidity, and thermal conductivity, the material is adopted in a wide range of fields, including mechanical seals used to prevent liquid from leaking out of the rotating shafts of pumps, agitators, and other rotating equipment, pump parts, semiconductor manufacturing equipment components, and precision positioning stage components. Hexoloy is a registered trademark of Saint-Gobain Advanced Ceramics.
• ※2 Halox refers to alumina ceramics with high-purity fine crystals bonded uniformly and densely. The product features excellent hardness, wear resistance, electric insulation, heat resistance, and chemical resistance, and is the most popular fine ceramic material used for a wide variety of applications.
• ※3 Halox-Z refers to zirconia toughened alumina ceramics with zirconia added to alumina ceramics and densely sintered. The material provides higher mechanical strength and fracture toughness (resistance to fracturing when stress is applied to a material with cracks) than conventional alumina ceramics, and is used for wear-resistant components.
• ※4 A coolant pump seal is a component designed to prevent water from leaking out of the coolant pump that helps remove heat from an automobile engine.

 

1. Outline of the parties to the company split (absorption-type split) (as of January 11, 2022)

2. Execution date of the company split (absorption-type split) and the share transfer

July 1, 2022 (planned)

3. Outline of the purchaser of the shares (as of January 11, 2022)

• To Japanese