Iljin Materials aims to complete stake sale in August

Iljin Materials Co., a South Korean electric vehicle battery materials maker, accelerated the process of the sale of a majority stake in a deal estimated at around 3 trillion won ($2.4 billion) to complete the disposal by August, investment banking industry sources said.

Iljin has decided to sell the management rights including a 53.3% stake held by its Chief Executive Heo Jae-Myeong, the second son of the parent Iljin Group’s founder and Chairman Heo Jin-gyu, according to the sources on Monday. The maker of elecfoil, a thin copper foil used for cathode collectors in rechargeable lithium batteries, recently hired Citigroup Global Markets as its sale manager.

The seller is set to send investment memorandums this week with a schedule to open a preliminary bid around the end of next month and a final bid in early August, aiming to choose a buyer within the month.

If the process goes smoothly as scheduled, Iljin could find a new owner in three months. But it is expected to take considerably longer for due diligence and fundraising, given the size of the deal. It also takes about six months to sell a company through an open bid.

The seller aims to proceed with the sale only to a buyer that is really interested in the company as the number of candidates is limited. South Korea’s secondary battery makers such as LG Energy Solution Ltd. and Samsung SDI Co., as well as global major private equity firms including The Carlyle Group and Affinity Equity Partners were understood to have received teaser letters.

TO SELL ASAP

Iljin appeared to accelerate the process of the sale in order to minimize its impact on the business.

The global elecfoil market is expected to quickly increase with demand forecast to fivefold to 1.5 million tons in 2025 from some 300,000 tons last year in line with the rapid growth in EVs. Iljin should focus on meeting such demand from battery makers, not spending time on the sale and post-merger integration.

Iljin’s plan to sell the stake, unveiled last week, sparked various rumors including ones on a family feud as the company has been fostering the business even by joining a race for an acquisition deal worth hundreds of millions of dollars. Most executives and employees were nervous when they heard of the confidential plan through media reports. Its share price tumbled, losing 16% to 78,900 won on May 27 from 93,900 won on May 24 when the company said its top shareholder considered various strategic moves including a stake sale.

CEO Heo has reportedly been mulling the sale for a long time as its local competitor SK Nexilis Co., fully owned by SKC Co., grew to become the global leader backed by strong support by the country’s No. 2 conglomerate SK Group amid surging global copper foil demand.

Heo was also known to have seen limits in the business expansion even as he has made aggressive moves such as expanding overseas markets with external financing.

“He may take this sale as a chance to hand over the company to a new owner and completely withdraw from the copper foil-related business. He also discussed it with his father,” said a source with direct knowledge of Iljin Group.

“Iljin does not need to separate affiliates again as it has completed the reorganization of affiliates among siblings. CEO Heo also has no intention of handing over the company to his children, as far as I know.”

Write to Chae-Yeon Kim at why29@hankyung.com
Jongwoo Cheon edited this article.