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Asahi Kasei Buys Polypore

M&A: Deal highlights growing role of Japanese firms in battery materials

by Jean-François Tremblay
February 26, 2015 | A version of this story appeared in Volume 93, Issue 9

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Credit: Tesla
Asahi Kasei sees growing demand for battery materials used in electric cars such as the Tesla Model S.
Picture of a Tsela car.
Credit: Tesla
Asahi Kasei sees growing demand for battery materials used in electric cars such as the Tesla Model S.

In a move that strengthens Japan’s position as a leading supplier of lithium-ion battery materials, Asahi Kasei has agreed to buy Polypore International’s battery materials operations for 2.2 billion, a price criticized as too high by one stock analyst. At the same time, 3M will snap up Polypore’s separation media business for another $1 billion.

With headquarters in St. Paul, Minn., Polypore develops and manufactures microporous membranes used in a range of industries. They include polyolefin membranes used in both traditional lead-acid batteries and advanced lithium-ion batteries to separate the anode from the cathode. Battery materials account for more than two-thirds of the company’s sales—some $450 million in 2013.

Polypore has also developed membrane filtration technologies for the health care and life sciences industries. The company claims that its filtration membranes are used daily in kidney dialysis and during heart surgery. The membranes also serve manufacturers in the pharmaceutical and semiconductor industries.

The Asahi Kasei and 3M deals have been approved by the boards of all three companies concerned. But in a note to investors, Yoshihiro Azuma, a stock analyst at the investment bank Jefferies, argues that the transaction does not benefit Asahi. The Japanese chemical giant is overpaying by about $600 million for its piece of Polypore, Azuma estimates. Moreover, he contends, the prospects for lithium-ion car batteries are not that rosy. “Lithium-ion batteries for autos should remain a small market even five years from now,” he writes.

Nevertheless, Asahi and other Japanese chemical firms have aggressively invested in battery materials in recent years. Asahi itself is already a big player. It runs a separator plant in Miyazaki, Japan, and a joint venture with FDK Corp. that develops and produces lithium-ion capacitors.

On Feb. 24, the Japanese firm Toda Kogyo set up a joint venture with BASF to make cathode materials for lithium-ion batteries. Last month, Ube Industries bought out its partner, Dow Chemical, in U.S.-based Advanced Electrolyte Technologies, a supplier of electrolytes for lithium-ion batteries. And last spring, Sumitomo Chemical said it was doubling its capacity in Japan for lithium-ion battery separators, in part because of growing sales of Tesla’s Model S electric car.

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