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M&As

Samyang joins bid to acquire US-based chemical maker Emerald Kalama

Nov 01, 2020 (Gmt+09:00)

Samyang Holdings Corporation, a South Korean manufacturer of food and chemical products, has joined the bid to acquire US-based Emerald Kalama Chemical, a specialty materials maker, in a move to secure new growth drivers and shore up its overseas presence, according to the chemical industry on Nov. 1.

Samyang has been seeking ways to boost growth since its core businesses are focused on the domestic market and its profitability has been rather meager given the nature of the industry. Earlier this year, group Chairman Kim Yoon proposed stepping up Samyang's global presence alongside aggressive M&A activities.

Emerald Kalama was founded in 1971 by three former Dow Chemical employees. The company is a global leader in the specialty materials sector, which includes aroma chemicals, benzoic acid and benzaldehyde. It boasts competitiveness in ingredients used to flavor carbonated drinks. Emerald Kalama operates production facilities in the US and the Netherlands and houses around 500 employees.

The company's robust portfolio of aroma chemicals is expected to have great synergy with Samyang, which offers a balanced portfolio of food products and chemicals.

Emerald Kalama Chemical

The US specialty materials maker's largest shareholder is US-based private equity firm American Securities, which acquired Emerald Performance Materials from Sun Capital Partners in 2014. Emerald Performance holds two subsidiaries, Emerald Kalama and CVC Thermoset, of which CVC was acquired by US-based manufacturer Hunstman Corporation in May.

As a privately held company, Emerald Kalama's official revenue, profits and other company data remain private. However, local media reported that Emerald Performance Materials' EBITDA was near $110 million (around 125 billion won) in 2019. Since CVC Thermoset’s EBITDA was around $30 million, then Emerald Kalama’s EBITDA can be assumed to be around $80 million.

Details of the deal have yet to be disclosed as the deal structure could change in the negotiation process. Morgan Stanley is the sell-side advisor.

The deal will be carried out as a limited tender in the US. It was almost scrapped earlier this year due to the coronavirus but was recently resumed. Samyang's cash and cash equivalents on a consolidated basis are around 150 billion won ($132 million), meaning that the group is likely to require additional financing. Market watchers expect Samyang to secure liquidity by selling off its non-core assets.

Many consider Samyang's corporate culture to be too conservative to participate in deals in the hundreds of billions of won range. The group aims to change its reputation through its participation in the Emerald Kalama deal.

At home, the group has carried out a few deals including a joint establishment of Huvis, a fiber company, in 2000 with SK Chemicals. Samyang also became the country's largest plastic bottle maker after acquiring Asepsys Global (former Hyosung Packaging) in 2015. In 2017, Samyang acquired chemical material maker KCI for 70 billion won.

Samyang posted around 2.5 trillion won in revenue and an operating profit of 80 billion won in 2019.

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

Danbee Lee edited this article.
 

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