Houlihan Lokey Advises Shinagawa Refractories

Houlihan Lokey is pleased to announce that Shinagawa Refractories Co., Ltd. (Shinagawa), one of Japan’s leading manufacturers of refractories and ceramics materials, has acquired the Brazilian refractory business and alumina-based wear-resistant ceramics business in the United States from Compagnie de Saint-Gobain S.A. (Saint-Gobain). The purchase consideration of the acquired businesses is €70 million. The transaction closed on December 29, 2022.

Founded in 1875, Shinagawa is one of the top five producers in the global refractories market, with 2,836 employees and revenues of approximately ¥100 billion in 2021. Shinagawa is an affiliate company of JFE Steel Corporation, which owns a 34.03% stake.

Founded in 1665 and headquartered in Paris, Saint-Gobain is a global leader in the manufacturing and sales of materials for construction and a variety of other industrial markets. The company achieved sales of €44.2 billion in 2021 and employs 166,000 individuals globally.

Operating from a state-of-the-art production facility in Vinhedo in the state of São Paulo, Brazil, Saint-Gobain’s Brazilian refractory business is a leading supplier of refractory ceramics for the iron and steel industry in Brazil, with a strong market position among all leading Brazilian steel manufacturers. In addition, the business offers refractory solutions for a growing number of customers in other industries, including foundry, nonferrous metals, petrochemicals, and cement. The acquisition provides a unique opportunity for Shinagawa to establish a leading position in the growing Brazilian refractories market and establish additional manufacturing capacity in support of its continued overseas expansion.

Operating from a single production facility in Latrobe, Pennsylvania (close to Pittsburgh), the alumina-based wear-resistant ceramics business produces a range of market-leading wear-resistant alumina products under the brand name Durafrax®. These premium wear-resistant ceramics supplied in both standard sizes and pre-engineered shapes are highly customized to user requirements and provide abrasion protection, reduce wear and tear, and enhance the lifespan and sustainability of industrial processing equipment in a variety of end markets, including mining and mineral processing, iron and steel, asphalt, and energy. Shinagawa has been in the wear-resistant ceramics business in Japan through its subsidiary company Shinagawa Fine Ceramics Co., Ltd., and this acquisition enables Shinagawa to tap into the global market for the first time.

The acquisition of these two business is expected to close in late 2022 or early 2023, after completion of the necessary carve-out and regulatory procedures.

Houlihan Lokey acted as the lead financial advisor to Shinagawa.