Hahn & Co. to buy controlling stake in SK’s specialty gas unit for $1.9 bn

South Korea’s private equity firm Hahn & Co. is set to acquire a controlling stake in the world’s top specialty gas producer SK Specialty Co. for 2.7 trillion won ($1.9 billion), investment banking industry sources said on Monday.

SK Inc. signed a deal to sell an 85% stake in the specialty gas unit to Hahn & Co., while the holding company of South Korea’s No. 2 conglomerate SK Group agreed to keep the remaining 15%, according to the sources.

For the acquisition, Hahn & Co. plans to use a blind fund of 4.7 trillion established for the takeover in July, the sources added.

The private equity firm has been in talks for the takeover since it was named as a preferred bidder in September.

REDUCES VALUE

Hahn & Co. had initially estimated the value of SK Specialty’s entire stake at 4.3 trillion won but sought to reduce the deal’s value by 5-10%, given the recent downturn in the global semiconductor industry and a series of failed deals in the sector such as the sale of the South Korean unit of US industrial gas maker Air Products and Chemicals Inc.

The private equity firm asked SK Inc. to maintain a part of SK Specialty’s stake as the company generates much of its sales from the group’s affiliates such as SK Hynix Inc., the global top manufacturer of high bandwidth memory (HBM) used in artificial intelligence chips.

SK Specialty’s sales to the group affiliates totaled 108.4 billion won, about 31% of its total revenue of 355.5 billion won in the first half of this year. The company’s sales to SK Hynix comprised 19% of its total revenue of 681.7 billion won in 2023.

SK Specialty manufactures gases used in the production of semiconductors, displays and solar cells for global companies including SK Hynix, Samsung Electronics Co. and LG Display Co.

The company is the world’s largest maker of nitrogen trifluoride (NF3), a gas used as a cleaning agent in semiconductors, with 40% global market share.

Write to Jun-Ho Cha at chacha@hankyung.com
 
Jongwoo Cheon edited this article.