Acquiring SGL GE and building a three-region graphite electrode network (2017)

A well-timed purchase, with the outcome left to the market

To call this acquisition foresight alone is to make the story too simple. The chance to fill the North American gap was not something Tokai Carbon had set up; it arose by accident out of the divestment conditions US authorities attached to Showa Denko’s purchase of SGL GE. The core of President Nagasaka Hajime’s judgement lies in raising his hand without hesitation, immediately after the largest loss in the company’s history, for a ¥12.9 billion asset that had appeared as a by-product of someone else’s deal. Choosing attack — striking at a gap in the supply network — at a moment when going on the defensive would have been unremarkable is what gives this decision its outline.

Whether it can be called a success must nevertheless be discounted for the violent swings of the market that followed. The record profit of 2018 owed much to the external factor of a surge in electrode prices, and that market soon reversed, driving the graphite electrode business into operating losses. The three-region network in turn became a subject of site rationalisation. The strategic significance of gaining a North American foothold and the fate of an electrode business permanently exposed to the cycle are separate matters; the question of how the sites are to be traded in and out was left not to the moment of acquisition but to the long operation that came after.