Calgon Carbon’s stock spikes on news of $1.3 billion deal to be acquired by Japanese firm

PITTSBURGH—In an announcement destined to produce a collective swoon among shareholders, Pittsburghbased Calgon Carbon said Thursday it agreed to be acquired by a much larger Japanese company for about $1.1 billion in cash.

The offer by Kuraray Co. Ltd. at $21.50 per share represented a 63 percent premium over Calgon Carbon’s closing price Wednesday of $13.20 per share. Including the assumption of debt, the total transaction is valued at about $1.3 billion.

The news ignited Calgon Carbon’s shares, which surged $8.20, or 62 percent, to close at $21.40 Thursday.

“Not only does this transaction deliver premium value to our stockholders, it also benefits our customers and employees by making Calgon Carbon part of a much larger, stronger, global company,” said Randy Dearth, chairman and CEO of the company that makes activated carbon products used to purify water and treat industrial emissions.

Tokyo-based Kuraray, with sales of $4.5 billion compared with Calgon Carbon’s roughly $500 million, plans to create a subsidiary that would operate Calgon Carbon as a separate business unit and keep its name.

Calgon Carbon has about 1,400 employees worldwide, including 350 in the Pittsburgh area.

Kuraray — which specializes in plastics, rubber, fibers and textiles, and has a smaller activated carbon unit — is buying Calgon Carbon to expand its activated carbon business into the U.S. and Europe, Dearth said in an interview. As a result, no layoffs are planned, he said.

“It will be business as usual. We will continue to run our company as we run it,” he said, noting that he and the rest of the top management team plan to stay on.

Dearth, 53, declined to discuss the genesis of the deal, saying details about how it came together would be laid out in proxy materials to be filed with the U.S. Securities and Exchange Commission.

The transaction, which the companies expect to close at the end of the year, needs approval from Calgon Carbon shareholders and regulators.

Analysts at Janney Montgomery Scott downgraded Calgon Carbon’s shares from “neutral” to “sell” Thursday, saying the company’s position as a supplier to the U.S. military could stymie the deal.

“A foreign buyer could be an issue for U.S. government approval,” Janney said in a research note. Analysts there also said it appeared that Kuraray was overpaying.

Calgon Carbon has been struggling of late, weighed down by weaker demand, reorganization costs and expenses related to the acquisition of a water filtration business last year. The company earned $13.8 million in 2016, down from $43.5 million in 2015. Profits also dropped in the first two quarters of this year.

Dearth said he was most excited about the combined company’s research and development prospects.