Exclusive-Japan fund JIC plans to sell JSR to Mitsui Chemicals, sources say
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TOKYO, Nov 4 : Japan Investment Corp (JIC), a state-backed fund, plans to sell chipmaking materials maker JSR to Mitsui Chemicals in a deal that could exceed 1.3 trillion yen ($8.20 billion), two people familiar with the matter said.
A decision could come as soon as within the month, said one of the people, who were speaking on condition of anonymity.
Mitsui Chemicals said it is considering various options including acquiring JSR but no decision has been made. JIC and JSR did not reply to requests for comment.
A deal would reshape Japan's chip supply chain as the government seeks to improve its competitiveness even as market participants see it as a large acquisition for Mitsui Chemicals to digest financially.
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Reuters, which previously reported JIC is considering selling JSR, is reporting the final buyer for the first time.
Shares in Mitsui Chemicals fell 13 per cent following Reuters' report.
JIC acquired JSR for some 900 billion yen two years ago and had said it planned to use the business to drive consolidation in the semiconductor materials sector.
The fund will instead sell JSR to a domestic chemical major as it takes advantage of a lift in the valuation of chip-related firms due to a boom in AI investment.
JSR, established in 1957, is a leading manufacturer of photoresists which are used to transfer circuit patterns onto semiconductor wafers.
Mitsui Chemicals, which is also expanding its chip materials business, has a market capitalisation of about 800 billion yen,
"Concern about the substantial amount of funding needed appear to have come to the fore," said Tsutomu Yamada, an analyst at Mitsubishi UFJ eSmart Securities, of the share fall.
The deal could be among the largest in Japan's chemicals sector, exceeding the 2020 acquisition of Hitachi Chemical by Showa Denko which created Resonac Holdings.
Mitsui Chemicals had 217.8 billion yen in cash and cash equivalents and 876.4 billion yen in interest-bearing debt as at the end of June.
Its debt-to-equity ratio, a measure of financial soundness, stood at 0.75.
"Adding JSR's semiconductor strengths could boost its presence in the sector and lead to a re-rating," said Yamada.
Japan has many companies making niche but essential materials for the chip supply chain.
"The materials market is getting bigger and bigger, particularly thanks to AI," said Akira Minamikawa, an analyst at Omdia.
"If you remain small you're going to become unable to address that growing market."
JIC, which is overseen by the trade ministry, was set up in 2018 to invest in companies with the goal of boosting Japan's competitiveness.
Its investments include medical equipment maker Topcon alongside private equity firm KKR.
($1 = 158.5200 yen)
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