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December 19, 2007
| Company Name |
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Sekisui Chemical Co., Ltd. |
| Representative |
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Naotake Okubo, President and
Representative Director |
| Stock Listings |
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Tokyo, Osaka (First section) |
| Company code |
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4204 |
| Phone |
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+81 (3)-5521-0522 |
Expanding Pipeline Rehabilitation Business in U.S.A.
through Acquisition of U.S. Corporation
- Striving to Become the Global No.1 Company in Pipeline Rehabilitation by Strengthening Operations in the United States -
The Urban Infrastructure & Environmental Products Company (Company President: Yoshiyuki Takitani) of Sekisui Chemical Co., Ltd. (President: Naotake Okubo; hereinafter Sekisui Chemical) acquired the entire outstanding share of Heitkamp, Inc. (President: Benedict H. Ebner; hereinafter Heitkamp), a pipeline rehabilitation company. Heitkamp was a wholly-owned subsidiary of Frontier-Kemper Constructors, Inc., an underground tunnel construction company based in the state of Indiana, U.S.A. The purchase amount was $12 million USD.
Sekisui Chemical established Sekisui SPR Americas, LLC. (President: Pieter Tackenberg; hereinafter Sekisui SPR Americas) in 2005 and started its pipeline rehabilitation business in the United States. Further business expansion is expected with the acquisition of Heitkamp, which conducts value-chain business providing pipeline inspection and construction works mainly in the northern East Coast.
| 1. |
Background |
As stated in the Midterm Management Vision “GS21-Go! Frontier” launched in FY2006, Sekisui Chemical is striving to evolve into a “prominent” and “highly profitable” company and working on the creation of growing business and new business that realize high profit as significant issues. As such, the Urban Infrastructure & Environmental Products Company has been expanding its business focusing on “water environment solutions project” and “overseas project.” In particular, the pipeline rehabilitation field, which is experiencing rapid increase in demand, conducts value-chain business providing pipeline inspection and construction on a global basis utilizing the “SPR method” that enables no-dig rehabilitation of aged pipelines.
The pipeline rehabilitation business in the U.S. started with the establishment of Sekisui SPR Americas in 2005 as a sewage pipeline rehabilitation company in Atlanta, Georgia. Throughout the U.S., problems such as collapse and subsidence of road, water leakage and the spread of malodors caused by the aging and deterioration of sewage pipes have become a serious social issue far more grave than those experienced in Japan. The U.S. Environmental Protection Agency has issued orders for improvement to twenty cities and regions across the U.S., and significant business growth is expected in the nation's future pipeline rehabilitation business.
Sekisui SPR Americas has been conducting business providing pipeline rehabilitation materials mainly by the SPR method and developing business partnerships. In order to achieve further business expansion and improvement of overall service, substantial increase in construction capability has become a major issue.
Heitkamp has been conducting pipeline rehabilitation works mostly in the northern East Coast since 1982. In addition to possessing high construction capability, the company serves a wide range of business including pipeline inspection and evaluation, and maintenance, receiving a high amount of orders.
Sekisui Chemical determined that competitiveness in the pipeline rehabilitation business in the U.S. would be strengthened and significant growth could be expected by acquiring Heitkamp.
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| 2. |
Acquisition Objectives |
| Gaining the foundation for promoting value-chain business in the northern East Coast in the U.S. |
| 1) |
Accelerate the popularization of the SPR method by exploiting the construction capability of Heitkamp, which has a solid foundation in the northern East Coast with high demand for pipeline rehabilitation business and holds construction license in 25 states. |
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Expand the SPR business through Heitkamp's pipeline inspection and evaluation services that generate more than 300 orders per year. |
| 3) |
Expand business field by entering the market for water supply pipeline rehabilitation. |
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| 3. |
Outline of the Company |
| 1) |
Name: Heitkamp, Inc. |
| 2) |
Types of Business:
Rehabilitation and maintenance of water supply and sewage system, pipeline inspection and evaluation business |
| 3) |
Location: 99 Callender Road, Watertown, Connecticut, U.S.A. 06795 |
| 4) |
Establishment: 1982 (Date of acquisition: December 10, 2007) |
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Paid-up capital 900,000 US dollars (approx. 107 million yen) *1 |
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Shareholder: Sekisui America Corporation (wholly-owned)*2 |
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President: Benedict H. Ebner |
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Number of employees: About 150 |
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Net sales: 25,267,000 US dollars (approx. 3 billion yen) (in 2006) |
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1 US dollar = 119 yen (exchange rate applies to other figures) |
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Sekisui America Corporation is a wholly-owned American subsidiary of Sekisui Chemical. |
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| 4. |
Business Objectives |
| The combined pipeline rehabilitation business of Sekisui SPR Americas and Heitkamp will target net sales of 10 billion yen and operating margins of 10% by 2010. |
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| 5. |
Global Strategy of Pipeline Rehabilitation Business |
| The pipeline rehabilitation market is a growing worldwide market promising high demand. Sekisui Chemical will aim to become No.1 in the world by solidifying its position as a domestic leader utilizing the SPR method and expanding business fields through the three key factors for growth; “technology,” “worldwide,” and “value chain.” The largest markets for pipeline rehabilitation are in developed countries such as the U.S. and European countries, where the aging and deterioration level of urban infrastructure is critical. Now that Sekisui Chemical has gained a business foundation in the U.S. through the acquisition of Heitkamp, entry into the European market will be reviewed and further expansion strategy will be promoted so that “SPR” evolves into the global No.1 brand in pipeline rehabilitation in the near future. |
Press Contact
Sekisui Chemical Co., Ltd.
Corporate Communication Department
Fax: (+81) 3-5521-0510
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Disclaimer
This press release may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors.
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