Urethane Blog
Possible SKpucore Divestiture by SKC
June 13, 2023
Korea’s SKC in talks to sell polyol subsidiary SK pucore to private equity firm
0
 |
| [Courtesy of SKC] |
SKC Corp., a South Korean polyethylene terephthalate (PET) film manufacturer, will sell its polyol subsidiary SK pucore Co. to a private equity firm in a move to liquidate assets to focus on chips and secondary battery materials business.
According to multiple sources from the investment bank industry on Monday, SKC is currently in talks to sell SK pycore to Glenwood Private Equity for about 500 billion won ($390 million).
The two companies recently signed a memorandum of understanding and are expected to sign a contract soon after conducting due diligence.
Samil PricewaterhouseCoopers is known to lead the sales as financial adviser of the buyer.
The deal is expected to be valued at about 10 times the last year‘s earnings before interest, taxes, depreciation, and amortization (EBITDA), which stood at 48.8 billion won.
SK pucore, formerly MCNS, which was jointly established by SKC and Japan’s Mitsui Chemicals Inc. in 2015, produces polyols, a raw material for polyurethane.
The partnership with Mitsui Chemicals ended in 2021 and the company changed its name. SK pucore has a dominant position in the domestic polyol market. Last year, it accounted for 40 percent of the entire market.
The sale comes as SKC is hoping to stack cash for investments and improve financial health.
SKC announced to invest 1.8 trillion won to strengthen its semiconductor and secondary battery materials business capacity. SKC is also in the process of acquiring semiconductor testing company ISC Co. for about 400 billion won.
SKC’s net debt to EBITDA was more than 6 times in the first quarter of this year, up from 3.5 times in 2021. The company’s net debt stood at 3.6 trillion won as of the first quarter.
Glenwood PE is a mid-sized private equity fund manager in Korea. It recently acquired the diagnostics division of LG Chem Ltd. and is the second-largest shareholder of Hanwha Advanced Materials Corp. and CJ Olive Young Corp.
Glenwood PE, in particular, manages PI Advanced Materials Co., which it previously acquired from SKC. The latest deal is expected to create synergy.
Polyurethanes manufactured through SK pucore’s flagship product, polyols, are utilized in a wide range of downstream industries, including automotive, fashion, electronics, and medical devices.
The company has more than 450 customers, more than 130 distribution partners, and production facilities in five countries. Last year, SK pucore raised 32.4 billion won in operating profit on sales of 720.6 billion won.
The company has secured future growth engines recently by developing eco-friendly polyol products. Customers return waste polyols to SK pucore, and the company makes recycled polyols from them and supplies them back to customers. The company is also accelerating the production of bio-polyols based on vegetable oils.
The investment bank industry is observing whether SKC will continue to secure more assets to build a portfolio that centers on new businesses.
“This year, we plan to strengthen the competitiveness of our core businesses by expanding global expansion and sales of copper foil and increasing the proportion of high-value-added products in our semiconductor and chemical businesses,” said SKC Chief Executive Officer Park Won-cheol in March.
“We will expand new growth businesses through active additional mergers and acquisitions.”
The company also sold its film division to private equity firm Hahn & Company for 1.6 trillion won last year.
Some critics, however, raise concerns about the sales being carried out by SKC as the M&A market is still unstable.
“We are concerned that the company is selling assets in a rush when the buyer has more power,” said an industry insider. “The company is desperate to secure liquidity but it should also be considered that it may send an excessive signal to the market that SKC’s financial situation is unstable.”
Sign Up for Email Updates
Everchem Updates Archive