Baring Private Equity Asia drops $1 bn deal to buy PI Advanced Materials

Hong Kong-based Baring Private Equity Asia has withdrawn from its $1 billion M&A deal to acquire South Korea’s PI Advanced Materials Co., the world’s largest polyimide film manufacturer, after the firm’s stock price dropped and higher interest rates raised concerns about its financials.

Baring PEA on Thursday notified PI Advanced Materials’ largest shareholder Glenwood Private Equity of its decision to break the deal, according to regulatory. The move is expected to trigger considerable conflicts, including legal disputes between the two private equity firms over the cancellation.

The two sides were scheduled to close the transaction by the end of September, but the date was pushed to the end of December due to delays anti-trust reviews from overseas authorities. However, with less than three weeks left before the deadline, Bearing PEA scrapped the deal.

Back in June, Baring PEA signed a stock purchase agreement for a controlling stake in PI Advanced Materials from Glenwood for 1.3 trillion won ($992 million). The PEF agreed to buy the stake for about 80,000 a share, but its stock price now trades around 30,000 won. The firm’s market capitalization also shrunk to less than 1 trillion won.

PI Advanced Materials, formerly known as SKC Kolon PI, was established in 2008 as a joint venture between SKC and Kolon Industries Inc. PI Advanced Materials has maintained market leadership since 2014. PI is a chemical material classified as a super engineering plastic with broad-based applications across the industry. It commands around 32 percent of the global market ahead of rivals such as DuPont, Kaneka, and Toray.

Glenwood PE acquired a 54 percent stake in PI Advanced Materials in 2020 for about 607 billion won, becoming the largest shareholder. PI Advanced Materials has been accelerating business diversification under the new ownership.