The Sumitomo Chemical integration, announced and abandoned (2000)

The “merger of the century” undone by ratio and control

Announced in December 2000, barely three years after the merger that created Mitsui Chemicals, the combination with Sumitomo Chemical was to have produced the largest diversified chemical company in Japan. The reasons for attempting it were the same two that had driven every earlier move: a company carrying 48 businesses had a fragile earnings base, and the industry as a whole still had more capacity than it could use. The reasons it failed were the ones that make equal mergers hard — the terms of exchange, the shape of the combined portfolio, and who would run it. In March 2003 the plan was withdrawn.

What the company did instead is the more revealing part. Rather than seek another partner of comparable size, Mitsui broke the problem into pieces and dealt with them one at a time: polyolefins into Prime Polymer with Idemitsu Kosan in 2005, polyurethane materials with Takeda, agrochemicals from Sankyo, lens materials from SDC Technologies. The failure of the grand integration is what pushed the company toward the accumulation of smaller acquisitions from which, a decade later, its life and healthcare business would be assembled.