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Polychem and JPO to Discuss Details of PE Business Integration

JAPAN POLYCHEM CO., LTD.
JAPAN POLYOLEFINS CO., LTD.
June 7, 2001

Japan Polychem Co., Ltd. (Polychem) and Japan Polyolefins Co., Ltd. (JPO) have agreed to begin a detailed discussion about planned integration of their polyethylene businesses.

Polychem (President: Takayori Tsuboi, head office: Chiyoda-ku, Tokyo) started in September 1996 as a joint venture between Mitsubishi Chemical Corporation and Tonen Chemical Corporation to merge their polyolefins operations.

JPO (President: Koji Hanakura, head office: Minato-ku, Tokyo) started in October 1995 as a polyolefins joint venture between Showa Denko K.K. and Nippon Petrochemicals Co., Ltd. JPO is currently engaged exclusively in the manufacture and sale of polyethylene.

The Japanese polyethylene manufacturers are facing ever-intensifying international competition because of the Japanese government's decision to reduce tariff rates for polyethylene imports, start-ups of new large-sized facilities in Asia and the Middle East, and increased presence of Western major petrochemical companies in Asia. This situation is creating a need for the Japanese polyethylene producers to drastically renew their business strategies.

Under the circumstances, Polychem and JPO have been studying various ways to strengthen their international competitive power. This time, the two companies have agreed to study in earnest the possibility of integrating their polyethylene businesses into a joint venture as a means to establish competitive edges by enlarging the scale of business and increasing efficiency in R&D and distribution. Through this measure, the two companies intend to better serve the needs of their customers.

For further information, contact:
Japan Polychem Co., Ltd. (Phone: 03-3287-8010)
Japan Polyolefins Co., Ltd. (Phone: 03-3595-4713)

[Reference]

Japan Polychem Co., Ltd.

Start-up date September 1, 1996
Capital ¥20 billion
Sales Approx. ¥150 billion
Total assets Approx. ¥120 billion
Employees Approx.1,000
Shareholders Mitsubishi Chemical Corporation (65%)
Tonen Chemical Corporation (35%)
President Takayori Tsuboi

Japan Polyolefins Co., Ltd.

Start-up date October 1, 1995
Capital ¥15 billion
Sales Approx. ¥70 billion
Total assets Approx. ¥60 billion
Employees Approx.600
Shareholders Showa Denko K.K. (65%)
Nippon Petrochemicals Co., Ltd. (35%)
President Koji Hanakura

Outline of the New Company (as planned)

Name Not decided yet
President To be named by Polychem
Start of operations Spring of 2002
Capital Not decided yet
Sales Approx.¥150 billion
Equity ratio Majority to be owned by Polychem
Scope of business Development, manufacture and sale of polyethylene resins
Number of employees Not decided yet

Polyethylene Production Capacity in Japan

Unit: Kt/y
  LDPE L-LDPE HDPE Total Locations
Polychem 203 321 199 723 Kashima, Kawasaki, Yokkaichi, Mizushima
JPO 214 70 326 610 Kawasaki, Oita
Mitsui
241 206 447 Chiba
Tosoh 152 56 125 333 Yokkaichi, Nannyo, (Chiba*)
Sumitomo 172 158
330 Chiba
Unicar 180 110 10 300 Kawasaki
Asahi 119
163 282 Mizushima
Ube 146 51
197 Chiba
Idemitsu
60 130 190 Chiba
Mitsui DuPont 170

170 Chiba, Otake
Keiyo PE
(Maruzen, Chisso)


168 168 Chiba
Total 1,356 1,067 1,327 3,750 (*: Joint investment)