Japan’s Teijin has agreed to buy US composites specialist Continental Structural Plastics Holdings (CSP) for $825 million. Benefiting from CSP’s established sales channels, the deal will give Teijin the foundations for building an automotive composite products business in North America and accelerate its expansion as a tier 1 supplier to the global market.

Headquartered in Auburn Hills, Michigan, CSP operates at 14 locations worldwide: 11 are in the US, with others in Mexico, France and China. Once the transaction is completed in December 2016, pending the usual closing conditions and regulatory approvals, CSP will become a wholly owned subsidiary of Teijin.

The US firm, which reported sales of more than $634 million in 2015, is a leading manufacturer of thermoset composites for automotive applications and is the world’s largest sheet molding compound (SMC) manufacturer supplying carmakers. It holds more than 50 patents and the Class A – or visible - surfaces produced by its SMC technology have been adopted by various automotive companies in the US, Europe and Japan.

As a major producer of carbon and aramid fibers, as well as thermoplastics, Teijin’s portfolio and expertise is complementary to CSP’s business and the merger of the two is expected to yield significant synergies.

The acquisition will allow Teijin to expand its offerings beyond carbon fiber and glass fiber materials in collaboration with other manufacturers. The Tokyo-based company said it intends to expand its portfolio from materials to component design, implement a global supply chain and help reduce vehicle weight to comply with tighter environmental regulations being introduced after 2020. It is targeting annual sales in its automotive composite products business of $2 billion by 2030.

Plans by Teijin to build a carbon fiber plant in the US will give CSP a North American supply source. The facility in South Carolina will have a capacity of around 3,000 t/y and is scheduled to start production in the financial year ending March 2019.

The merger has superseded CSP’s proposed tie-up with Japanese rival Mitsubishi Rayon. The two signed a memorandum of understanding in July to study a jv to supply lightweight carbon fiber components to the North American car industry.