Showa Denko to Sell Aluminium Business to Apollo Global Management
Showa Denko AluminiumDaily Advent

Showa Denko to Sell Aluminium Business to Apollo Global Management

Japan’s Showa Denko KK plans to sell its aluminium rolling business for electronic components as well as the aluminium can business to US investment

Japan’s Showa Denko KK plans to sell its aluminium rolling business for electronic components as well as the aluminium can business to US investment fund Apollo Global Management. Company has decided to execute a master agreement for a series of transactions, including the succession of the aluminum can business of the Company to Showa Aluminum Can Corp and the succession of the aluminum rolling business to Showa Denko Sakai Aluminum Corp. Following the completion of the series of transactions under the Master Agreement, Showa Aluminum Can is expected to no longer be consolidated subsidiary of the Company, and be succeeded by Apollo as an independent company.

The aluminum can business of the Company has provided high quality aluminum cans for beverages through an integrated process extending from the molding of can bodies and lids to printing, Showa Aluminum Can, which is a consolidated subsidiary of the Company, started to manufacture aluminum cans for beverages in 1971, becoming the first company in Japan to do so. In 2014, the Company acquired shares of Hanacans Joint Stock Company in Vietnam, and has been developing its business in the rapidly growing Vietnamese aluminum can market.

In the domestic aluminum can market, although demand for alcoholic beverage cans has been stable with increasing demand for non-beer alcoholic beverages, there has been a significant decrease in demand for non-alcoholic beverage cans due to their replacement with PET bottles. It is expected that the business environment will continue to be challenging in the future. In order to respond to such changes in the domestic market, the Company has been working to strengthen its domestic business base, including by optimizing production capacity at its domestic production bases in June 2020.

On the other hand, the Vietnamese aluminum can market is expected to see continued strong demand for beverage consumption in the future as well, and the Company, in July 2020, completed its third manufacturing facility in Vietnam, and has established a three-base system covering all of northern, central, and southern Vietnam.

In the future, the Company is planning further growth by actively exploring opportunities to expand its business around the world, including in Vietnam, while promoting and strengthening its business foundation and aiming to stabilize profits in Japan.

The aluminum rolling business of the Company commenced operations as Takada Aluminum Instrument Factory in 1933, later had its name changed to Showa Aluminum Corp., and then became the Sakai office of the Company in 2001. At present, the Company produces high purity aluminum foil for aluminum electrolytic capacitors, as well as aluminum plates that are used for building materials as well as cap and printed base materials.

The high purity aluminum foil produced by the Company has strength in high-end products with high capacity and high strength, and the Company has the number one market share of sales in the global high purity aluminum foil for aluminum electrolytic capacitor market. In 2013, the Company established Showa Denko Aluminum (Nantong) Co., Ltd. in Nantong, China, and has built a manufacturing and sales system of stable supply of high quality, high purity aluminum foil for the rapidly growing Chinese market.

Aluminum electrolytic capacitors are widely used in a range of fields from home appliances to IT equipment, electric vehicles and hybrid vehicles, as well as in the new energy sector, and demand is expected to grow, particularly in the environmental and energy sectors. As the market is expected to grow in the medium to long term in China in particular, the Company shall continue to further improve profitability by maintaining its technological superiority and strengthening its cost competitiveness.

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