Doosan taps PEFs to sell copper clad board division

Doosan Co., the holding company of South Korea's Doosan Group, is in contact with several private equity firms to sell its in-house electronic materials division that produces copper-clad laminates (CCLs), a core material for OLED displays.
 
The company of the heavy machinery and power equipment-focused group is in the early stages of talks with both domestic and overseas PEFs, asking for over 1 trillion won ($888 million) for the profit-making division, according to investment banking sources on Apr. 13. 

Doosan, 44% owned by its founding members, plans to use the proceeds from the planned carve-out to take over Doosan Bobcat Co., one of the group's core units, from Doosan Heavy Industries & Construction Co. which owns 51% of Bobcat. Based on the market capitalization of 4 trillion won, the 51% stake is worth around 2 trillion won.  

The holding company had once entered into a discussion with Seoul-based SKyLake Investment which had acquired a 53% stake in Doosan Solus Co., a battery copper foil and OLED materials maker, for 700 billion won last year. But their talks have made no progress, the sources said.

CCLs are a base material for printed circuit boards (PCBs) and for OLED displays used in mobile devices. Doosan holds a 24% market share of flexible CCLs used in mobile phones and tablet PCs worldwide, alongside a 29% share in the package CCL market.

Doosan's electronic materials business saw its operating profit declining to 98 billion won in 2020 versus 113 billion won a year ago, dented by softening demand for electronics goods in the pandemic era. Sales dwindled to 816 billion won from 1.1 trillion won during the same period.

The planned business sale is part of the debt-lade Doosan Group's ongoing business restructuring to repay debts and to streamline its ownership structure. Net borrowings at Doosan Heavy, 42% held by Doosan Co., reached 4.5 trillion won in 2020, with a debt-to-equity ratio of 220%.

Earlier this year, Doosan Co. had sold its profitable forklift business to construction equipment affiliate Doosan Bobcat for 750 billion won. 

Last year, the holding company had sold its hydraulic components manufacturing arm Doosan Corporation Mottrol Co. to a consortium of two domestic private equity investment firms -- Socius Advisors and Well to Sea Investment Co. -- for 453 billion won.

In February this year, Doosan Heavy Industries & Construction Co. offloaded its controlling stake in the business unit of Doosan Infracore Co., a construction equipment maker, to Hyundai Heavy Industries Holdings Co. for 850 billion won.

For the stake sale of Infracore, the company was split into an investment entity and a business unit. The remaining investment unit was acquired by Doosan Heavy.

The possible CCL business sale and the plan to use the proceeds to acquire a majority stake of Doosan Bobcat is subject to approval from its creditors, led by two state-run banks Korea Development Bank and the Export-Import Bank of Korea.

Write to Jun-ho Cha and Sangeun Lucia Lee at chacha@hankyung.com
Yeonhee Kim edited this article.