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Report: Chinese Interest in Supplier SGL

SGL Carbon corporate hq in Meitingen, Germany. Source DPA Tobias Hase
SGL Group's research center in the town of Meitingen in southern Germany.
  • Why it matters

    Why it matters

    SGL Group might be able to divest its ailing graphite electrodes business, clearing the way to improve earnings.

  • Facts

    Facts

    • SGL has two core business areas: graphite electrodes for the steel industry and carbon fibers for automobile manufacturers.
    • Susanne Klatten, a BMW shareholder and Germany’s wealthiest woman, owns almost 28 percent of SGL Group.
    • Ms. Klatten took over as chairwoman of the SGL supervisory board in spring 2013, and Jürgen Köhler became CEO at the beginning of 2014.
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State-owned ChemChina, the largest chemicals company in China, has talked with SGL and a major shareholder over the possibility of buying the loss-making manufacturer of carbon and graphite, German business weekly Manager Magazin reported Friday, citing people familiar with the company.

SGL’s shares jumped as much as 12 percent on the Frankfurt stock exchange and the stock traded up 11 percent at €11.73, at 11:50 a.m. local time, valuing the company at €1 billion, or $1.1 billion.

ChemChina, which in February agreed to buy Swiss seeds maker Syngenta for $43 billion, has held talks with SGL’s chief executive, Jürgen Köhler, and SGL’s largest single shareholder, Susanne Klatten, Manager Magazin reported.

An SGL spokesman denied that the company, based near Frankfurt, has had any talks with suitors interested in the entire business. He said the company was only in talks to sell its division making graphite electrodes used to recycle steel, which has been making losses due to a fall in steel prices.

“We are talking with strategic parties and financial investors” about the graphite electrodes business, the spokesman, who declined to give names of companies interested, told Handelsblatt Global Edition. “Everything else is speculation,” he added.

ChemChina would prefer to buy the whole of SGL, but is also open to other options, Manager Magazin reported.

 

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The Chinese company’s reported interest in buying SGL, or portions of it, is part of a growing trend of Chinese acquisitions overseas.

On Monday, Chinese investment firm FGC bid €676 million for German chip machine supplier Aixtron, while Chinese household appliances maker Midea last week made a bid for German robotics firm Kuka.

SGL’s graphite electrodes operations, which also produce cathodes and lining for furnaces, has been suffering from overcapacity in the global steel market. Last year, SGL suffered a loss of €295 million mainly due to writedowns on the business unit and restructuring costs. The business made up 40 percent of SGL’s revenue of €1.3 billion last year.

In 2014, SGL bolstered its capital position by selling shares to current and new shareholders, including German carmakers VW and BMW and Ms. Klatten, who is Germany’s wealthiest woman and a major BMW shareholder.

 

Gilbert Kreijger is an editor with Handelsblatt Global Edition in Berlin, covering companies and markets. To contact the author:  kreijger@handelsblatt.com

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