Tokai Carbon Co. Ltd. on June 26 announced it has entered into an agreement to acquire Fort Worth-based Sid Richardson Carbon Ltd. and its affiliate companies in a transaction valued at about $308 million.
The acquisition will give Tokai a major presence in the North American market, as Sid Richardson Carbon is the largest carbon black producer in the United States.
Sid Richardson Carbon has three plants in the U.S., two in Texas, one in Louisiana and a research facility in Fort Worth. According to the Tokai news release, Sid Richardson Carbon has built a solid reputation among European, North American and Japanese tire manufacturers. The company’s customer base includes Goodyear, Michelin, Bridgestone and Continental. Sid Richardson Carbon had sales of $311.9 million in 2017 and $386.6 million in 2018. The company has about 350 employees. The affiliate companies included in the transaction are SRCG Ltd. and New SRCG Genpar LLC.
Sid Richardson Carbon was founded in 1947 for the purpose of developing the West Texas Keystone oil field. The company acquired a channel black plant in Odessa in 1948 and built a Big Spring plant in 1961. It opened its Fort Worth research facility in 1970.
Tokai said it expects to utilize Sid Richardson Carbon’s unique technology strengths to improve Tokai Carbon’s productivity and strengthen cost competitiveness.
Sid Richardson Carbon produces 440 thousand tons of carbon black annually, a product that is primarily used in tires. Demand for carbon black is currently exceeding supply, according to a presentation from Tokai in announcing the acquisition. The U.S. is No. 2 user of carbon black, with 14 percent of the worldwide market, behind China, which uses 41 percent.
Tokai said that because of the environmental concerns and legislation it is difficult to build new carbon black plans in the U.S., creating a barrier to entry. Sid Richardson Carbon last year reached an agreement with the Environmental Protection Agency to make capital investments to meet environmental regulations. As part of the agreement, Sid Richardson Carbon was fined $999,000, expects to spend $490,000 on environmental technology from 2018-2021 and will make additional capital spending of approximately $100 million from 2018 through 2023.
According to the news release, the acquisition of Sid Richardson Carbon will contribute to Tokai Carbon’s ongoing efforts to establish itself as a global player in the carbon black business. Tokai Carbon moved into the North American market in 2014 with the acquisition of Cancarb of Canada in the thermal black market. Thermal black is produced from natural gas.
Sid Richardson, uncle to Perry R. Bass, was a Fort Worth oilman and confidante to many politicians in the state and the nation. According to the Handbook of Texas, Richardson was well established as a millionaire by 1935, when he opened up the rich Keystone oilfield in Winkler County where the carbon black business was initially started.