Korea’s Iljin sticks to higher stake sale price than bid

Iljin Materials Co.’s sale process has reached a deadlock as its Chief Executive Heo Jae-Myeong is holding to its price to sell a controlling stake in the South Korean electric battery material maker, which is higher than the key candidate's bid price.

Heo has maintained the price tag for his 53.3% stake in Iljin, the world’s No. 4 copper foil producer, at some 3 trillion won ($2.2 billion), investment banking industry sources said on Sunday.

On the other hand, Lotte Chemical Corp., the de facto solo candidate for acquisition, was known to have proposed mid-to-low 2 trillion won for the stake during a final bid on Aug. 19, according to the sources. US private equity firm Bain Capital, which had been a preferred bidder, did not participate in the round.

Lotte and Iljin have yet to narrow their positions even after several negotiations over the phone, sources said.

“We don’t have to sell it in a hurry unless we get a proper price,” Heo, the second son of the parent Iljin Group’s founder and Chairman Heo Jin-gyu, and the group officials were quoted as saying by the sources.

TOO EXPENSIVE

Lotte looked for the acquisition in a move to diversify its portfolio centered on the existing petrochemical business through investments in the electric vehicle battery materials sector. Demand for copper foil, a key battery material, has been surging in line with rapid growth in the global EV market.

Iljin, which accounts for 13% of the world’s copper foil market, was expected to expand its market share if Lotte invests in the company, industry sources said.

Lotte was understood to have been contacting local banks and brokerage houses to raise money for the acquisition.

The petrochemical manufacturer has complained about CEO Heo’s adherence to the price as the company needs to spend at least 500 billion won more on the deal.

Iljin’s market capitalization has shrunk to some 3.3 trillion won from 4.3 trillion won in May when the company put the majority stake up for sale. The price tag of 3 trillion won was excessive for the 53.3% stake, even with management rights, industry sources pointed out.

Lotte Group Chairman Shin Dong-bin, however, may push ahead with the deal to secure the future growth engine of the country’s fifth-largest conglomerate, some sources said.

“The ball is in Lotte’s court now,” said an investment banking source. “It is possible to make an aggressive bet as Shin has had his right to work restored with a special pardon granted earlier this month.”

Write to Chae-Yeon Kim at why29@hankyung.com
Jongwoo Cheon edited this article.