IMM among shortlisted bidders for special chemicals maker Songwon

Competition to acquire Songwon Industrial Co., one of the world’s top specialty chemicals makers, is heating up as the South Korean company and Goldman Sachs, the lead manager for the sale, will launch bidding next week.

Songwon is planning to sell a 35.7% stake owned by its founding family at 300 billion-400 billion won ($230.1 million-$306.7 million), sources familiar with the matter said on Monday.

The shortlisted three bidders are Seoul-based IMM Private Equity, TKG Taekwang Co., a shoe supplier to Nike, and packaging machine maker Simpack Inc. The three players have completed their due diligence of Songwon and are in the valuation process ahead of the bid on Dec. 11.

S-Oil Corp., Saudi Aramco’s Korean unit, was among the bidders but has recently decided not to participate in the bidding.

Songwon is the world's second-largest polymer stabilizer maker with 22% of the global market share, following a 43% share by German chemicals giant BASF SE, according to the Korean firm's data.

Polymer stabilizers are used for auto components, electronics parts and semiconductors to slow the degradation of polymeric materials such as plastics and rubbers when they are exposed to heat, cold and ultraviolet light.

Songwon has quickly expanded its global market share since 2008 as its US and Japanese rivals closed their businesses amid the global financial crisis. The firm posted 1.33 trillion won in revenue and 131.9 billion won in net profit last year.

Market watchers say that Songwon and any potential buyer will engage in a tug-of-war over the valuation as global demand for plastics has plummeted, hurting the firm’s earnings.

For the first three quarters of this year, Songwon’s revenue declined 24% on-year to 784.2 billion won and operating profit plunged 70% on-year to 54.9 billion won.

Its earnings were hit by dropping demand from China, the company’s biggest customer, and as prices for specialty chemicals have normalized after soaring amid pandemic-driven supply chain disruptions.

Write to Jun-Ho Cha at chacha@hankyung.com

Jihyun Kim edited this article.