TOKYO — Japanese materials producer Showa Denko will sell its underperforming lead-acid battery operations to investment fund Advantage Partners and financial services company Tokyo Century for 60 billion yen ($540 million), looking to focus on growth areas and put its finances back in order after a costly acquisition, Nikkei has learned.
The business is handled by Showa Denko Materials, formerly known as Hitachi Chemical. Showa Denko reported revenue of about 160 billion yen for its battery operations last year. About 60 billion yen of this was generated by an Italian subsidiary, which will not be included in the sale.
Showa Denko bought Hitachi Chemical last year for 960 billion yen with an eye on its semiconductor materials business. Borrowing for the deal swelled the materials maker’s interest-bearing debt to roughly 1 trillion yen at the end of March, more than triple the total a year earlier.
Lead-acid batteries are used in autos and as emergency power supplies in office buildings. The former Hitachi Chemical bought Italian and Thai manufacturers of the energy storage devices in 2017, looking to tap into growing awareness of disaster-related risks after Japan’s devastating earthquake and tsunami in 2011.
But with rising lead prices eating into profitability, and fewer synergies emerging from the acquisition than originally anticipated, Showa Denko began weighing a sale.
The materials maker aims to unload 200 billion yen worth of operations to repay debt and reduce its debt-equity ratio. Since January, it has reached agreements for about 110 billion yen in sales. Also on Wednesday, Showa Denko announced plans for the transfer of a ceramics manufacturer within the group.
