Toray to Buy U.S. Carbon Fiber Maker Zoltek for $584 Million

Toray Industries Inc. (3402), the maker of the carbon fiber used in Boeing Co.’s 787 Dreamliner, agreed to buy Zoltek Companies Inc. (ZOLT) for $584 million to expand into markets including windmill blades and auto parts.

Toray, based in Tokyo and the world’s largest producer of carbon fiber, will acquire all outstanding shares of St. Louis-based Zoltek for $16.75 a share in cash, according to a statement filed with the Tokyo Stock Exchange today. The companies plan to complete the deal by early 2014, according to a statement from Zoltek.

Zoltek, founded in 1975 by Chief Executive Officer Zsolt Rumy, had faced pressure to make changes since March when activist investor Quinpario Partners LLC bought a 10 percent stake and offered to acquire the company. Today’s deal should help Toray strengthen its sales franchise in the U.S., said Yoshihiro Azuma, an analyst at Jefferies & Co.

“Toray should be able to improve the quality of Zoltek’s products by transferring its technology,” Azuma, who recommends buying Toray shares and doesn’t rate Zoltek, said in a note.

Zoltek rose 13 percent yesterday, the most in six months, after the Nikkei newspaper reported the deal. The shares fell 9.8 percent to $16.70 at the close today in New York. Toray increased 1.6 percent to 644 yen in Tokyo.

Both parties may be subject to a termination fee of $23 million if the deal is aborted, depending on the circumstances, Zoltek said in a U.S. regulatory filing today.

Quinpario has cut its stake to less than 5 percent of shares outstanding and terminated efforts to replace the board, the St. Louis-based private equity firm said in a U.S. filing today.

JPMorgan Chase & Co. advised Zoltek on the deal.

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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