Competition heats up to acquire major antioxidant producer Songwon

Songwon Industrial Co.’s factory in Ulsan. [Courtesy of Songwon]

Global private equity funds (PEFs) and local conglomerates are vying for the acquisition of Songwon Industrial Co., a South Korean petrochemical company that has recently been put up for sale. Songwon is the world’s second-largest producer of antioxidants and is recognized for its strong market position.

According to industry sources on Thursday, a number of global PEFs including Carlyle Group, Kohlberg Kravis Roberts (KKR), Blackstone, and Hillhouse Capital, as well as major local corporations like LG Chem, Kumho Petrochemical, and Hanwha Solutions, have received teaser letters and are currently mulling their participation in the acquisition bid for Songwon.

Earlier, Songwon selected Goldman Sachs as its lead underwriter to explore the sale of approximately 36 percent of its ownership stake held by the founding family. Market watchers estimate that the value of this stake, when coupled with a management premium, could reach around 250 billion won ($190 million). As of August 31, Songwon’s market capitalization hovers around 490 billion won.

Founded in 1965, Songwon is a leading petrochemical company specializing in the production of antioxidants, particularly polymer stabilizers known for preventing oxidation - the degradation of plastics caused by exposure to external factors such as heat, cold, and light. These antioxidants are essential additives that enhance the durability of products used in various industries, including automotive components, electrical and electronic parts, semiconductor circuits, adhesives, and building materials.

Songwon holds the second-largest market share in the global antioxidant market, following Germany’s BASF.

In 2022, Songwon achieved an operating profit of 185.1 billion won over sales of 1.33 trillion won. However, the demand for its products diminished in the second quarter of this year due to geopolitical uncertainties, resulting in a sales decline to 269.2 billion won, down by 21.4 percent from a year ago, while operating profit contracted by 59.5 percent to 22 billion won.