Sanyo Chemical, Nippon Shokubai Cancel Merger Plans

Sanyo Chemical and Nippon Shokubai announced Wednesday that they have canceled their planned merger, as the coronavirus pandemic highlights their diverging strategies on a key material used in disposable diapers.

“The Companies adopted a resolution to cancel the Business Integration and terminate by mutual agreement the final agreement concerning the Business Integration as of October 21, 2020,” the Companies announced at their respective meetings of the Board of Directors held on Wednesday.

The companies said that the uncertainity in business environment casued by the coronavirus pandemic was the reason for the cancellation of the business merger and the termination by mutual agreement of the final agreement concerning the business merger.

On November 29, 2019, the Companies executed a final agreement concerning the Business merger and announced that they will close the deal on October 1, 2020.

Subsequently, on April 13, 2020, because of the global outbreak of COVID-19 and the sharp decline in the oil and oil product markets caused the performance of the Companies, as well as the financial, economic, market and other elements of the business environment, which served as bases for the agreement on the business merger, to become unpredictable.

“Because the business environment surrounding the Companies has rapidly and significantly changed after the execution of the final agreement concerning the Business merger, such as significant changes in raw material prices and product prices as well as heightened uncertainty about product demand in the future, the Companies reached the conclusion that it has become difficult to conduct the Business Integration,” the companies said.

“In association with the cancellation of the Business Integration and the termination of the final agreement concerning the Business Integration, the impact on financial forecasts, such as the expenses to be recorded at each Company, is being carefully examined by each Company,” the companies added.