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Chemicals

Hanwha to buy $900 mn Hanwha General shares from Samsung

Hanwha Group will take full ownership of Hanwha General, halting its IPO plan

By Jun 23, 2021 (Gmt+09:00)

(Courtesy of Hanwha General Chemical)
(Courtesy of Hanwha General Chemical)

Two Hanwha Group units have decided to buy the remaining stake in their affiliate Hanwha General Chemical Co. for 1 trillion won ($880 million) from the Samsung Group, putting on hold the process of taking the chemical unit public by year's end.

Hanwha Energy Co. and Hanwha Solutions Corp. are acquiring a combined 24.1% stake in Hanwha General from Samsung C&T Corp. and Samsung SDI Co., the four companies said in regulatory filings on June 23. 

The Hanwha units will divide their payment into three tranches between this year and 2023, including the first payment of 367.8 billion won by July 30. They will foot the first bill with their cashholdings, while financing the remainder with profits to be generated from the businesses.

Currently, Samsung C&T, the construction and trading arm of the conglomerate, holds a 20.05% stake in Hanwha General, while Samsung SDI has a 4.05% stake.

The two Samsung units have been left with the Hanwha General shares since their parent group sold its four units of the chemical and defense businesses to the Hanwha Group for 2 trillion won in 2015, in a so-called big deal.

Under the deal, Hanwha Group had pledged to list the manufacturer of basic petrochemical feedstock by the end of April 2022. The two Samsung units were also granted options to sell their shares back to Hanwha Group, in case the IPO plan is scrapped.

To make good on the promise, Hanwha General, formerly known as Samsung General Chemical, had applied for a preliminary review of its stock market listing earlier this month.

"While proceeding with the IPO process, we had, until recently, simultaneously held discussions to buy the shares held by Samsung Group," said a Hanwha Group official. "We finally decided to take over the shares, instead of going ahead with an IPO."

(Courtesy of Hanwha General Chemical)
(Courtesy of Hanwha General Chemical)

Hanwha General's forays into the hydrogen distribution and eco-friendly chemical markets were also behind the parent group's decision to take full ownership of the unit, the official added. 

Hanwha General, founded in 1988, is South Korea’s biggest producer of terephthalic acid (PTA), a primary component in many types of polyester. It produces basic petrochemical feedstock such as polyethylene, polypropylene and butadiene.

Last year, it earned an operating profit of 37.5 billion won on sales of 998.1 billion won.

Once the stake purchase is completed, Hanwha Energy will end up with a 52% stake in Hanwha General, with Hanwha Solutions holding the remaining 48%.

Write to Kyung-min Kang at kkm1026@hankyung.com

Yeonhee Kim edited this article.

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