News from Notch Consulting, Inc.

January 20, 2014

Tokai Carbon acquires Cancarb Limited for C$190M

Filed under: Carbon Black — Notch @ 10:20 am

TransCanada Corporation (Calgary, Alberta, Canada) announced today it has reached an agreement to sell Cancarb Limited and its related power generation facility to Tokai Carbon Co., Ltd. (Tokyo, Japan) for aggregate gross proceeds of C$190 million, plus customary adjustments. The transaction is expected to close late in the first quarter of 2014, subject to various approvals.

According to TransCanada, the Cancarb divestiture allows TransCanada to focus on its core business of large-scale pipeline and power generation projects in Canada, the United States and Mexico. J.P. Morgan Securities LLC acted as the exclusive financial advisor on the transaction.

TransCanada acquired Cancarb in 1981. Cancarb is the world’s largest producer of “thermal carbon black,” a specialized form of carbon derived from super-heated natural gas, which is used in a wide range of industrial and automotive products including high-grade rubber, insulation and ceramics. The adjoining 41-megawatt power plant that was added in 2001 captures large volumes of waste heat from the manufacturing process to produce electricity that is sold into Medicine Hat’s electrical grid, helping to reduce greenhouse gas emissions.

“Low natural gas prices, combined with Cancarb’s strong performance and global market share for thermal carbon black, made it an attractive investment for prospective buyers,” said Russ Girling, TransCanada’s president and chief executive officer in a press release.

Tokai Carbon is not currently a producer of thermal black, but is the seventh largest producer of furnace black in the world, with about 500K of annual capacity at plants in China, Japan, and Thailand. Other leading producers of medium thermal black are Orion Engineered Carbons, based in Germany, and Gazprom Pereabotka, based in Russia.

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