S Korea’s Samsung to sell chem units to Lotte for around $2.6bn

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SINGAPORE (ICIS)–South Korea’s Samsung Group is selling its chemicals business units to fellow conglomerate Lotte Group for about won (W) 3,000bn ($2.6bn), the companies said in separate announcements released on Friday.

Lotte Chemical said will acquire a 90% stake in lithium ion-battery maker Samsung SDI for W2,3000bn and a 31.5% stake in Samsung Fine Chemicals, thereby providing the company an equity interest in Samsung BP Chemicals Co, Lotte said in a filing to the Korea Exchange.

Samsung SDI’s sell-off is part of its plans to expand its battery and electric materials businesses, Samsung SDI said in a separate statement.

Samsung Fine Chemical’s 49% stake in Samsung BP Chemical will also be handed over to the Lotte affiliate. Malaysia-based chemical firm BP Chemicals holds a 51% stake in the joint venture.

The deal between Samsung and Lotte is expected to be completed in the first half of 2016, Lotte Chemical said.

Lotte said it plans to rename Samsung SDI as S Chemical.

Samsung’s sell-off of its chemicals business is part of the company’s initiative to streamline the businesses within the massive conglomerate and improve the finances of its core businesses.

In November last year, Samsung decided to sell controlling stakes in its chemical and defense units to another Korean conglomerate Hanwha Group for W1,900bn.

This divestment, which includes a 57.6% stake in Samsung General Chemical and a 50% stake in Samsung Total, was completed in April this year. The two firms are now called Hanwha General Chemical and Hanwha Total.

Samsung SDI produces styrene polymers such as acrylonitrile butadiene styrene (ABS), engineering plastics such as polycarbonates as well as construction materials.

The company has two polycarbonate plants at its Yeosu site.

Samsung Fine Chemicals is engaged in the production of basic chemicals products and intermediary materials such as biodegradable polymers, polysilicon, ammonia, urea as well as epichlorohydrin (ECH), caustic soda and methyl chloride.

Samsung Fine Chemicals has two 60,000 tonne/year ECH units in Ulsan, South Korea.