Nippon Shokubai and Sanyo Chemical merger to give rise to Synfomix Co., Ltd.

Synfomix Co., Ltd. is the new name for the combined Nippon Shokubai Co., Ltd. and Sanyo Chemical Industries, Ltd., which announced that they have reached an agreement to merge. The trade name “Synfomix” is a coined word meaning synthesis and formulation. 

Takao Ando, currently president and CEO of Sanyo Chemical, will be the chairman of the merged company; Yujiro Goto, currently president of Nippon Shokubai, will serve as president.

The move is designed to cut costs and streamline overseas operations, an effort to better compete with foreign rivals.

Goto said the merged entity will “not only pursue scale but work on higher value-added products,” while Ando commented that the merger “will allow us to pour more resources into new business areas.”

The companies announced on 29 May 2019, that have been discussing whether to merge. On 29 November, they announced their decision to proceed with their “business integration.” The merger is based on the condition that it will be approved by the competition authorities in Japan and relevant countries. 

Synfomix intends to become a chemical manufacturer with both significant global presence as well as multiple businesses with strength by combining Nippon Shokubai’s value chain of competitive materials and Sanyo Chemical’s solutions business that addresses customers’ challenges.

The merged entity will be the eleventh-largest chemical company in Japan, ranked by sales. Shokubai is currently ranked 14th, while Sanyo is ranked 20th. Nippon Shokubai and Sanyo Chemical have combined annual sales of about JPY511.2 billion (USD4.7 billion) and operating profit of JPY39 billion (USD359 million). Nippon Shokubai and Sanyo Chemical have 4,541 and 2,072 employees, respectively. 

Nippon Shokubai based in Osaka, Japan, with its core catalyst, polymer and organic synthesis technology, has been engaged in the manufacture of basic chemicals, including acrylic acid and ethylene oxide, as well as the development, manufacture and sale of high-performance functional chemicals and environmental and catalyst products using these basic chemicals as raw materials.

Sanyo Chemical based in Kyoto, Japan, with its core surface activity control technology, has developed, manufactured and marketed approximately 3,000 types of sophisticated performance chemicals that meet the diversified needs of a wide range of industries, including lubricant additives.

Nippon Shokubai currently has a 5% stake in Sanyo Chemical. The largest shareholders in Sanyo Chemical are Toyota Tsusho, with 19.4%, and Toray Industries, with 17.3%. Sumitomo Chemical has a 6.84% stake in Nippon Shokubai.

The share transfer plan is scheduled to be prepared in early May 2020. The companies will establish a holding company in October 2020 to integrate operations, which will be followed by a full-blown merger in 2022. 1.225 shares of Synfomix will be allotted and delivered for each share of Nippon Shokubai common stock, while one share of the new company will be allotted and delivered for each share of Sanyo Chemical common stock.

In recent years, the business environment surrounding the chemical industry has become increasingly severe. In Japan, demand for chemicals is expected to decline, causing intense competition between chemical manufacturers. In emerging countries, there is an increase in demand for chemicals, but the rise of manufacturers from emerging countries and increasing scale disparity with European and American chemical giants are resulting in the Japanese chemical industry being less competitive.