Kumho shows M&A appetite

By Kim Yoo-chul

Korea's Kumho Petrochemical is looking harder at merger and acquisition (M&A) opportunities as it looks to strengthen its global profile and secure new growth engines.

"We are seeking M&A deals, with particular focus on Asian markets, although it's too early to talk about details," a Kumho spokesman said, who declined to reveal Kumho’s budget for investment and M&As.

The chemical firm has recently hired a number of seasoned M&A experts to hunt for deals. Companies in the raw-material sectors seem to suit Kumho.

The firm's aggressiveness appears to be stoked by growing demand for petrochemicals in both developed and developing markets.

"The situation requires chemical companies to be more active in pursuing growth. We think acquisitions make sense for Kumho as it looks for an edge over rivals in its main markets and to narrow the gap with leading competitors in next-generation segments," said a fund-manager from a European bank, who didn't want to be named.

Last month Kumho signed a memorandum of understanding (MOU) with JG Summit Petrochemical Corporation (JGPC) to establish a butadiene plant in the Philippines.

The company is investing more in its plant in Nanjing, China, to strengthen its polyurethane-related production capacities.

This is ambitious as Kumho is under a debt workout program after management feuds.

In a statement the company said its chairman Park Chan-koo made four overseas trips within the first quarter of this year to examine existing facilities and look for more business opportunities overseas.

"As expected, Kumho will graduate from the current debt-out program, maybe even this year. This allows Park to be more assertive," the Kumho official said.

Park will visit southern China in June to attend a ceremony for the inauguration of the company's new raw-materials plant, he said.

Park has increased his personal share in Kumho to 6.85 percent and plans to acquire more shares to guarantee stability in management, company sources said.

Helped by the return of the chairman and the bullish demand for synthetic rubber Kumho had record annual sales of 3.88 trillion won last year, while the annual operating profit was also a new high at 360 billion won, according to data from the Korea Exchange (KRX).

Kumho plans to reap 20 trillion won in revenue by 2020 with the contribution of its chemical affiliates.