Korea’s PI Advanced Materials to be sold to Arkema for $764mn

PI Advanced Materials Co. factory [Courtesy of PI Advanced Materials]

PI Advanced Materials Co., the world’s leading manufacturer of polyimide (PI) films used in smartphones and electric vehicles, will be sold to French chemical company Arkema S.A. for 1 trillion won ($764 million), which will allow the South Korean company to gain an overseas base in the U.S. and Europe.

PI Advanced Materials announced Wednesday that it will sell the management rights to Arkema Korea for 1 trillion won. Glenwood Private Equity, which acquired the Korean company for 607 billion won in 2020, signed a stock purchase agreement with Arkema Korea to sell 54.7 percent of the outstanding shares. Payment will be completed on March 31 next year.

PI Advanced Materials is previously SKC Kolon PI, a joint venture established by SKC Ltd. and Kolon Industries Inc. in 2008. The company has been the top player in the global PI film market for nine years in a row, outpacing global rivals such as Japan’s Kaneka Corp. and Toray Industries Inc. and U.S. DuPont de Nemours Inc.

PI Advanced Materials accounts for about 30 percent of the entire PI film market.

Glenwood PE acquired the company for 607 billion won in 2020 and changed the name to PI Advanced Materials. Since then, PI Advanced Materials has steadily increased its corporate value by strengthening its capacity in high-tech industrial products, such as PI films and varnishes for insulating EV batteries.

In 2022, the company posted an operating profit of 52.1 billion won on sales of 276.4 billion won, with an operating margin of nearly 20 percent.

The company plans to increase the sales of high-tech industrial products to 40 percent by 2025 from the current 30 percent range, with an aim to maximize profitability

Glenwood PE signed an agreement last year with Hong Kong-based Baring Private Equity Asia to sell its stake in PI Advanced Materials. However, the deal, valued at 1.3 trillion won, was later canceled, resulting in a major setback for the mergers and acquisitions market at that time.

Glenwood PE is currently seeking an arbitration case against Baring PEA for 50 billion won.

Since the deal collapsed last year, Glenwood PE has reportedly received offers from a number of strategic and financial investors. Prior to the collapsed deal last year, a number of domestic and foreign companies had participated in last year’s bid, including Lotte Chemical Corp. and KCC GLASS Corp., and Arkema.

Glenwood PE is said to have selected Arkema as the final buyer, considering the future expansion of PI Advanced Materials. The company has a strong foothold in Northeast Asia but there is a need to boost its presence in the U.S. and Europe.

Arkema, on the other hand, is set to expand its presence in Asia, creating synergy between the two countries.

PI Advanced Materials plans to secure a number of U.S. and European EV manufacturers as customers in the future. PI films can be used to block heat in EV parts, help dissipate heat, and prevent battery explosions.

“We have mainly focused on PI films for mobile devices such as smartphones up until now, but we hope to increase sales of PI films for automobiles and airplanes,” said an official from the company.

“With a European company as the majority shareholder, it will be easier for us to target the U.S. and European markets.”

The official also added that the company also expects to acquire new aerospace-related customers to supply PI films for airplanes and space launch vehicles.