Doosan enters race to acquire SK Siltron in strategic semiconductor push

South Korea’s Doosan Group has entered the bidding war for SK Siltron Co., the world’s third-largest manufacturer of semiconductor wafers, marking a bold move to expand its footprint across the semiconductor value chain and facilitate its transition from heavy equipment maker into high-tech manufacturer.

Doosan recently notified SK Inc., the holding company of SK Group, of its intention to join the race to acquire a 70.6% stake in SK Siltron from SK Inc., people familiar with the matter said on Wednesday.

The asset, which SK is offloading amid a broader portfolio realignment, has already attracted interest from a range of domestic private equity firms, including Hahn & Co., MBK Partners Ltd., IMM Private Equity and STIC Investments Inc.

The transaction is expected to value SK Siltron at around 5 trillion won ($3.5 billion), with Doosan estimating the equity value of the stake on offer at 1.5 trillion won ($1.1 billion), after deducting some 3 trillion won of debt.

A KEY GROWTH PILLAR FOR DOOSAN

For Doosan, the move reflects a long-term bet on semiconductors as a pillar of future growth, alongside small modular nuclear reactors, renewable energy, robotics and artificial intelligence.

The conglomerate has already forayed into the semiconductor space, acquiring non-memory chip testing company Doosan Tesna in 2022 for 460 billion won.

SK Siltron would give Doosan a strategic anchor in the front-end of chip manufacturing, where it currently lacks scale.

Sources said Doosan is expected to highlight its industrial pedigree and long-term strategic interest in the semiconductor sector as it competes with financial bidders.

The group is likely to argue that an acquisition by a private equity firm could trigger a resale to monetize the asset, whereas Doosan would ensure long-term operational stability and employment security for SK Siltron's workforce, they said.

A person close to the matter said Doosan’s acquisition push is led by Park Sang-soo, the eldest son of group Chairman Park Jeong-won.

A former semiconductor analyst at Korea Investment & Securities Co., Park Sang-soo joined Doosan Corp., the group’s holding firm, last year as a senior executive within its new business strategy team.

FINANCING COULD BE A CHALLENGE

Still, financing could prove challenging.

Doosan Corp. has about 200 billion won in cash and cash equivalents on a standalone basis, according to sources.

The company is said to be exploring various options, including leveraged financing from local banks and a possible consortium with financial investors to secure the deal.

If successful, the acquisition would mark Doosan’s most significant M&A transaction since its 2007 acquisition of US construction equipment maker Bobcat, later renamed Doosan Bobcat Inc.

SK Siltron is the world's third-largest manufacturer of semiconductor wafers, also called substrates, after Japan's SUMCO and Shin-Etsu Chemical.

The cash cow of SK Group generates more than 600 billion won in earnings annually.

In 2017, SK Group purchased a 51% stake in SK Siltron from LG Group for 620 billion won and an additional 19.6% from financial investors.

SK Group Chairman Chey Tae-won owns the remaining 29.4% stake in the wafer maker.

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

In-Soo Nam edited this article.