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ASIA-PACIFIC
Sumitomo Chemical and Mitsui Chemicals have abandoned merger talks to create the world's fifth largest chemical company after they failed to agree on their respective values.
Mitsui said it regretted that it could "not meet the expectations of shareholders, customers, and many other parties." One justification for the merger was to facilitate implementation of large projects like a new petrochemical complex in Singapore. Broad agreement on how to run the future company had been reached since November 2000, when the proposed merger was announced. Last summer, Sumitomo's president, Hiromasa Yonekura, told C&EN that he expected synergies worth $800 million. The companies were set to move into a new building in October, and the name of the new company had been decided. The two sides had agreed on a new salary scale that would have reduced the pay of most Mitsui employees. Last April, the two combined their polyolefins operations ahead of the full merger. That combination will remain. But despite the optimistic preparations, problems other than the merger ratio remained. Many employees, conditioned to think of the other firm as a competitor, were unenthusiastic. Sumitomo shareholders may have opposed a plan to inject cash into the underfunded pension funds of Mitsui Chemicals (C&EN, Sept. 30, 2002, page 17). Mitsui Chemicals' president, Hiroyuki Nakanishi, said at a press conference last week that Mitsui will have to revise its business strategy. Masami Sawato, a chemical industry analyst with HSBC Securities in Tokyo, says the merger would have induced other Japanese chemical companies to consolidate their operations. He cannot guess where such leadership will come from in the future. |
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