M&As DL Chemical to acquire Kraton for US$2.5 bn
South Korea’s DL Chemical, a subsidiary of DL Holdings Co (formerly Daelim Industrial Co), will acquire 100% of US-based Kraton Corporation, a producer of specialty polymers and bio-based products derived from pine wood pulping co-products. The all-cash transaction has an enterprise value of approximately US$2.5 billion. Last year, Kraton sold its Cariflex business, which makes the natural rubber substitute polyisoprene, to DL for US$530 million. The new owners swiftly invested US$50 million to expand polyisoprene capacity in Brazil. Kraton had sales in 2020 of US$1.6 billion and operating profits of US$70 million.
The acquisition is subject to certain customary closing conditions, including the receipt of stockholder and regulatory approvals, and is expected to close by the end of the first half of 2022.
Under the terms, Kraton stockholders will receive US$46.50 in cash for each share of Kraton common stock they own. As part of the transaction DL Chemical has conveyed that it has fully committed financing.
About 55% of Kraton’s sales come from styrenic block copolymer elastomers used in roofing, footwear, automotive, and other applications. The rest of its business is in pine chemicals. The company refines the by-products of papermaking into chemicals like fatty acids, rosin, and terpenes. Kraton bought this business, then known as Arizona Chemical, in 2016 as part of a diversification strategy.
"Following an extensive review of a wide-range of strategic alternatives focused on maximizing value for the benefit of our stockholders, Kraton's Board has determined that the sale of Kraton to DL Chemical is in the best interest of Kraton stockholders. We believe the transaction provides immediate and certain value for Kraton stockholders, and represents an attractive premium of approximately 50% over Kraton's unaffected market valuation as of early July," said Kevin M. Fogarty, Kraton's President/CEO. "Moreover, we believe DL Chemical has the industry presence and resources to continue to support the growth of Kraton's business on a global scale".
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, will acquire 100% of US-based Kraton Corporation, a producer of specialty polymers and bio-based products derived from pine wood pulping co-products. The all-cash transaction has an enterprise value of approximately US$2.5 billion. Last year, Kraton sold its Cariflex business, which makes the natural rubber substitute polyisoprene, to DL for US$530 million. ){kind=link}
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