WIESBADEN (dpa-AFX) - Showa Denko K.K. or SDK will be required to divest SGL Carbon SE's entire U.S. graphite electrodes business in order for SDK to proceed with its proposed $264.5 million acquisition of SGL's global graphite electrodes business, the U.S. Department of Justice announced today.
The Justice Department's Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the Department's competitive concerns.
According to the department's complaint, SDK and SGL manufacture and sell large ultra-high power graphite electrodes, which are used to generate sufficient heat to melt scrap metal in electric arc furnaces. The complaint alleges that SDK and SGL are two of the three leading suppliers of large ultra-high power graphite electrodes to U.S. electric arc furnace steel mills, and that the two firms together have a combined market share of approximately 56 percent. According to the complaint, the loss of competition between SDK and SGL would likely result in higher prices and lower quality of delivery and service to U.S. electric arc furnace customers.
Under the terms of the proposed settlement, SDK must divest SGL's entire U.S. graphite electrodes business, including its manufacturing facilities in Ozark, Arkansas and Hickman, Kentucky, to Tokai Carbon Co., Ltd., or an alternate acquirer approved by the United States. The department said that the divestiture will remedy the acquisition's anticompetitive effects by providing the acquirer with the domestic manufacturing presence and robust local service capabilities that U.S. electric arc furnace steel mills prefer.
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