Japanese consortium agrees $11.6 billion deal for chip materials maker JSR

what happened

Mitsui Chemicals and the Development Bank of Japan (DBJ) will take over chipmaking materials producer JSR from Japan Investment Corp (JIC), a state-backed fund. According to a filing reported by Reuters on Monday, the price is 1.84 trillion yen, or $11.61 billion. Reuters notes the transaction ranks among the largest in the sector and could reshape Japan's chip supply chain as the government pushes to strengthen domestic competitiveness.

Financing combines several pieces. Mitsui Chemicals plans to sell new shares worth up to 150 billion yen and has taken a bridge loan of 1.64 trillion yen, part of which will be repaid from the share sale. DBJ will put in 200 billion yen. The price is more than double Showa Denki's $4.55 billion purchase of Hitachi Chemical in 2020.

Mitsui Chemicals shares fell about 13% on Monday to roughly 1,500 yen, extending a drop of more than 10% last week after Reuters first reported it was the final buyer.

why it matters

The key question for markets is dilution and leverage at Mitsui Chemicals. The equity raise and the large bridge loan add pressure to the company's balance sheet, and the stock has already reacted sharply.

market impact

Mitsui Chemicals: share issue and bridge debt weigh on the stock

• ▼Mitsui Chemicals shares pressure down — share sale of up to 150 billion yen and bridge loan add balance sheet pressure

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