S. Korea's DL Chemical to acquire U.S. Kraton for $1.6 bn

Kraton`s SBC production plant in Belpre, Ohio of the U.S. [Photo provided by DL Group]

DL Chemical Co., the world’s largest producer of polybutene and a subsidiary of South Korea’s DL Holdings Co., will acquire a full stake in U.S. chemicals company Kraton Corp. for $1.6 billion, a deal that will cement the Korean chemical company’s leading position in the global petrochemical industry.

DL Chemical under former Daelim Industrial Co. said on Tuesday that its board on Monday decided to buy a 100 percent stake in Kraton for $1.6 billion in an all-cash transaction. Under the terms, Kraton stockholders will receive $46.5 in cash for each share of Kraton common stock they own. The Korean company will pay the acquisition with its own cash and loans from financial institutions with an aim to complete the acquisition in the first half of next year.

Houston, Texas-based Kraton with two pillar businesses polymer and chemical operates 13 production bases across the world including the U.S. and Europe and five research and development centers. Last year, it raised $1.56 billion in revenue and $262 million adjusted earnings before interest, taxes, depreciation, and amortization.

In polymer sector, Kraton is a leading supplier of styrene block copolymer (SBC) in the U.S. and Europe. SBC is an advanced technology material vital in producing sanitary adhesions, medical equipment material, vehicle interior material, and fifth-generation mobile communications cable. SBC produced by Kraton is of high quality and added value among synthetic rubbers, DL Chemical said.

Kraton is also a major bio chemical company that produces chemical products with refined by-products from the process of pine tree pulp production. Its annual bio chemical production capacity amounts to 700,000 tons. Materials include environmentally-friendly fuel, high-functional tire material, and green adhesives.

“We have been highly interested in Kraton’s specialty polymer and bio-based chemical business, and this combination will allow us to provide our customers with a wider range of innovative products, while adding the ability to serve a diverse range of end markets in over 70 countries worldwide,” said Kim Sang-woo, vice chairman and chief executive of DL Chemical.

The Korean company plans to actively localize key materials based on over 800 patents owned by Kraton.

So far, only a handful of advanced countries have been leading the development of new materials, making a majority of countries heavily reliant on imports of new materials.

DL Chemical plans to secure additional original technology through technology development and expand investment to establish a new materials industry ecosystem.

DL Chemical also acquired Kraton’s Cariflex business last year and expanded its production facility in Brazil in June. Cariflex is a leading producer of isoprene rubber latex and isoprene rubber for medical end markets.

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