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South Korea’s DL Chemical will acquire Kraton

Company that bought Kraton’s Cariflex polyisoprene business is now buying the rest of the firm

by Alexander H. Tullo
October 1, 2021 | A version of this story appeared in Volume 99, Issue 36


A photo of the Cariflex plant in Brazil.
Credit: Cariflex
The Cariflex plant in Brazil

The US specialty chemical maker Kraton has agreed to sell itself to South Korea’s DL Chemical in a transaction valuing Kraton at $2.5 billion.

Last year, Kraton sold its Cariflex business—which makes the natural rubber substitute polyisoprene—to DL, then known as Daelim Industrial, for $530 million. The new owners swiftly invested $50 million to expand polyisoprene capacity in Brazil.

DL is taking another trip to the buffet table for the rest of Kraton, which in 2020 had sales of $1.6 billion and operating profit of $70 million.

In the sale announcement, Kraton CEO Kevin M. Fogarty notes that the price DL is paying represents a 50% premium on Kraton’s market value in July, when rumors emerged that the company might be for sale. DL Chemical’s chairman, Sang-Woo Kim, says in the same announcement that DL has long been “highly interested in Kraton’s specialty polymer and bio-based chemical business.”

About 55% of Kraton’s sales come from styrenic block copolymer elastomers used in roofing, footwear, automotive, and other applications; the balance are 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.

DL Chemical was formed early this year when Daelim Industrial split into DL Holdings and a construction business. DL Holdings has annual sales of about $1.7 billion. DL Chemical, which makes polyethylene and the elastomer polybutylene, represents about 60% of those sales.

In a note to clients about the deal, UBS stock analyst John Roberts says that, in addition to having the polyisoprene business in common, DL and Kraton appear “to have adjacent C-4 chemical products and a small overlap in lube additive ingredients.”

Recent years have seen other purchases of US firms by South Korean companies. In 2019, a consortium of South Korean firms bought the silicones company Momentive. And in 2018, SK Holdings bought Ampac Fine Chemicals.



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