By Kim Yoo-chul
SK Corp. said late Monday that it has decided to purchase OCI Materials, the world's top supplier of the specialty gas, nitrogen trifluoride (NF3), to strengthen its memory chip business.
"SK Corp., the holding company of SK Group, decided at a board meeting to take over a controlling stake in OCI Materials," SK said.
The 49.1 percent stake is worth about 460 billion won including a management premium, according to SK. The Korea Times was the first to report SK's interests for OCI Materials in June: http://koreatimes.co.kr/www/news/tech/2015/06/129_180064.html
OCI and SK will announce the plan in a regulatory filing to the Korea Exchange, early today. An OCI spokesman said he had no comment about the issue until the filing.
NF3 is widely used in the manufacturing of semiconductors and liquid crystal display (LCD) panels. OCI Materials global share in the NF3 market is around 50 percent. SK hynix, the group's key revenue source, is one of the key clients for OCI Materials.
"SK Group has long been interested in advancing into the industrial gases market to have a vertically-integrated business structure in the memory chip business. The proposed deal will benefit both OCI and OCI Materials," SK said.
"Demand for NF3, a specialty gas for chips, mainly produced by OCI, will rise throughout 2017 without any supply glut," it said.
OCI will use the money saved from the sale of OCI Materials to beef up its materials businesses focusing on energy storage systems (ESS) and other chemical products.
OCI Materials had been up for sale for some time after its parent company OCI decided to sell its 5.18 million shares; but the initial plan was scrapped as the sale price was too high.
Credit Suisse was the lead manager for the deal, while Deloitte Anjin was picked as financial advisor, SK said.
The SK decision comes after the shares of OCI Materials retreated to the 100,000 won level after briefly touching 140,000 won, helping SK cut its financial burden for the purchase.
"After the first sale attempt was halted due to the high price, foreign investors approached OCI; however, OCI it was against allowing foreign capital buy OCI Materials. But the latest share price made the deal manageable in terms of price," said an official at one of the SK's technology affiliates.
OCI Materials was listed on the KOSDAQ in 1999. It posted 211.7 billion won in sales and 26.4 billion won in operating profit in 2014.
"The deal does make sense as the acquisition of OCI Materials will not pose a huge financial burden on SK given SK hynix's cash holdings. We are moving to reduce our reliance on the chemical and telecommunications businesses for sustainable growth," the official said.
The move comes after SK hynix's place in the global chip market is increasingly being challenged by Chinese companies and more investment in the memory business by market leader Samsung Electronics.
For the entire SK Group, SK hynix emerged as the biggest revenue channel as key affiliates are using its client channels to improve the memory business.
SK Corp. started its DRAM module business by using SK hynix's technology via its Hong Kong-based affiliate, Essencore. Essencore reported a 143 billion won operating profit in the first quarter of the year.
SK Corp. said late Monday that it has decided to purchase OCI Materials, the world's top supplier of the specialty gas, nitrogen trifluoride (NF3), to strengthen its memory chip business.
"SK Corp., the holding company of SK Group, decided at a board meeting to take over a controlling stake in OCI Materials," SK said.
The 49.1 percent stake is worth about 460 billion won including a management premium, according to SK. The Korea Times was the first to report SK's interests for OCI Materials in June: http://koreatimes.co.kr/www/news/tech/2015/06/129_180064.html
OCI and SK will announce the plan in a regulatory filing to the Korea Exchange, early today. An OCI spokesman said he had no comment about the issue until the filing.
NF3 is widely used in the manufacturing of semiconductors and liquid crystal display (LCD) panels. OCI Materials global share in the NF3 market is around 50 percent. SK hynix, the group's key revenue source, is one of the key clients for OCI Materials.
"SK Group has long been interested in advancing into the industrial gases market to have a vertically-integrated business structure in the memory chip business. The proposed deal will benefit both OCI and OCI Materials," SK said.
"Demand for NF3, a specialty gas for chips, mainly produced by OCI, will rise throughout 2017 without any supply glut," it said.
OCI will use the money saved from the sale of OCI Materials to beef up its materials businesses focusing on energy storage systems (ESS) and other chemical products.
OCI Materials had been up for sale for some time after its parent company OCI decided to sell its 5.18 million shares; but the initial plan was scrapped as the sale price was too high.
Credit Suisse was the lead manager for the deal, while Deloitte Anjin was picked as financial advisor, SK said.
The SK decision comes after the shares of OCI Materials retreated to the 100,000 won level after briefly touching 140,000 won, helping SK cut its financial burden for the purchase.
"After the first sale attempt was halted due to the high price, foreign investors approached OCI; however, OCI it was against allowing foreign capital buy OCI Materials. But the latest share price made the deal manageable in terms of price," said an official at one of the SK's technology affiliates.
OCI Materials was listed on the KOSDAQ in 1999. It posted 211.7 billion won in sales and 26.4 billion won in operating profit in 2014.
"The deal does make sense as the acquisition of OCI Materials will not pose a huge financial burden on SK given SK hynix's cash holdings. We are moving to reduce our reliance on the chemical and telecommunications businesses for sustainable growth," the official said.
The move comes after SK hynix's place in the global chip market is increasingly being challenged by Chinese companies and more investment in the memory business by market leader Samsung Electronics.
For the entire SK Group, SK hynix emerged as the biggest revenue channel as key affiliates are using its client channels to improve the memory business.
SK Corp. started its DRAM module business by using SK hynix's technology via its Hong Kong-based affiliate, Essencore. Essencore reported a 143 billion won operating profit in the first quarter of the year.
![[INTERVIEW] Can art become stable investment source?](https://img.koreatimes.co.kr/upload/thumbnailV2/d9b4b117e5b74f4c931de724ebd2ee68.jpg/dims/resize/178/optimize)
![[INTERVIEW] Choi Min-sik, Lee Dong-hwi on creating Korean-style noir with 'Big Bet'](https://img.koreatimes.co.kr/upload/thumbnailV2/8b795a8f6b42492db4e8fdc47e9abd8d.jpg/dims/resize/178/optimize)
![[INTERVIEW] Ahn Jae-hong on playing underdog basketball coach in 'Rebound'](https://img.koreatimes.co.kr/upload/thumbnailV2/fe381342632c46bfa6d3245cb475676e.jpg/dims/resize/178/optimize)
