SK interested in OCI Materials

Group plans to expand semiconductor business

By Kim Yoo-chul

SK Group is interested in taking over OCI Materials, the world's top supplier of special gas nitrogen trifluoride (NF3).

NF3 is used in the manufacturing process for semiconductors and liquid crystal display panels.

OCI Materials was put up for sale after its parent company, OCI, decided to sell 5.18 million shares, or a 49.1 percent stake, in OCI Materials.

“SK is interested in acquiring the 49.1 percent stake as part of corporate efforts in searching for next-growth engines focusing on the semiconductor business,” an industry official said Tuesday. “OCI Materials will help boost SK Group’s profits and sales.”

Credit Suisse is a lead manager of the sale. The brokerage will pick a preferred bidder by August.

The 49.1 percent stake is worth about 600 billion won. The market capitalization of OCI Materials stands at some 1.3 trillion won.

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 official said the acquisition of OCI Materials would not pose a huge financial burden on SK, with the price being estimated below 2 trillion won.

“It's no surprise that the SK Group of affiliates may team up to take over OCI Materials as the group is being urged to cut its reliance on the chemical and telecommunications business for sustainable growth,” said an official from a U.S.-based investment bank Tuesday.

He said SK’s plan to take over the company was to maintain leadership in the semiconductor industry.

“SK hynix became the group's cash cow,” he said. “Its acquisition of OCI Materials will create huge synergy.”

SK C&C, a holding company of SK Group, identified its DRAM module business as one of its next growth areas.

SK C&C started its DRAM module business by using SK hynix's channels and techs via its Hong Kong-based affiliate, Essencore. Essencore reported a 143 billion won operating profit for the first quarter of this year.

“SK C&C, which aims for the global top five as a supplier in the DRAM module business by 2020, will play a key role if the group acquires OCI Materials,” another official said. “SK wants to have a vertically integrated structure in its chip business, from manufacturing, module to materials by acquiring OCI Materials.”

“Demand for NF3, a special gas for chips, mainly managed by OCI, will rise throughout 2017 without any supply glut,” said Hyundai Securities analyst Park Young-joo.

Neither an SK Group spokesman nor an SK C&C spokesman made comments about the plan to bid for OCI Materials.