By Taiga Uranaka
TOKYO, Nov 11 (Reuters) - Japan's Mitsubishi Rayon Co said on Tuesday it will acquire unlisted British chemicals producer Lucite International for $1.6 billion in cash, joining a growing list of Japanese companies that are snapping up overseas bargains in the global financial crisis.
Japanese firms are buying overseas companies at a record pace this year, capitalising on the recent surge in the yen and tumbling stock markets to pick up assets they hope will drive profit growth.
Mitsubishi Rayon, a maker of synthetic fibres and other chemicals, said in a statement it had agreed with Lucite's top shareholder Charterhouse Capital Partners to buy all shares of the British chemicals firm.
Lucite is the world's top maker of methyl methacrylate (MMA) monomers, a basic material used in the production of acrylic resins, which are in turn used to make a wide range of products including liquid crystal displays, car lights and aquarium tanks.
"The deal is short-term negative but mid- and long-term positive for the company," said Credit Suisse analyst Masami Sawato before the official announcement. The acquisition plan had been reported by local media.
Sawato cited concerns over sluggish demand for MMA monomers due to the global economic slowdown for the next year or two, hurt by weak auto parts and other product sales.
"But in the longer term, I think demand will grow for such materials," he said.
Mitsubishi Rayon said the acquisition would give the Japanese company production bases in the United States and Europe, allowing it to accelerate its expansion into emerging markets such as Russia and South America.
Mitsubishi Rayon said it would complete its acquisition of Lucite shares from Charterhouse Capital, which has a 81.6 percent stake, and other shareholders in January 2009, subject to regulatory approval.
The firm said it would finance the deal through a loan from Bank of Tokyo-Mitsubishi UFJ and it would also seek partners who want to invest in Lucite. Mitsubishi Rayon plans to keep a majority stake.
The deal has been widely expected. Private equity firm Charterhouse Capital told investors last month it had reached a deal to sell Lucite to a Japanese firm, and sources told Reuters the buyer was Mitsubishi Rayon.
The deal would give Mitsubishi Rayon, currently ranked fourth, a comfortable lead in the MMA market.
The combined firm would have controlled 35 percent of the global market in 2007, according to Mitsubishi Rayon's estimates, well above the 15 percent held by second-ranked Rohm and Haas, a U.S. firm set to be acquired by Dow Chemical .
Acquisitions abroad by Japanese companies already total $61 billion this year, according to Thomson Reuters data, breaking the full-year record of $44.2 billion set in 2006.
These deals include drugmaker Daiichi Sankyo's $4.2 billion purchase of a 64 percent stake in India's Ranbaxy Laboratories.
The chemicals sector accounts for just $100 million of that tally, though that is up from $91 million last year.
Shares of Mitsubishi Rayon ended down 10.2 percent at 220 yen, underperforming a 3 percent decline in the benchmark Nikkei average.
Deutsche Bank and Merrill Lynch advised Lucite while Mitsubishi Rayon was advised by Credit Suisse and Mitsubishi UFJ Securities.
(Reporting by Taiga Uranaka; additional reporting by Quentin Webb in London; Editing by Michael Watson and Simon Jessop) ($1=97.89 Yen) Keywords: MITSUBISHI RAYON/ Keywords: MITSUBISHI RAYON/
(taiga.uranaka@thomsonreuters.com; +81-3-6441-1813; Reuters Messaging: taiga.uranaka.reuters.com@reuters.net)
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