Hyosung TNC acquires Hyosung Chemical’s specialty gas unit for $642 mn

Hyosung TNC Corp., a South Korean textile and yarn maker, said on Thursday it will acquire the specialty gas division of Hyosung Chemical Corp. for 920 billion won ($642 million).

The textile subsidiary of Hyosung Group approved the plan at its board meeting earlier in the day.

Last month, Hyosung TNC, the world’s largest spandex manufacturer, received a letter of intent for the acquisition from Hyosung Chemical and has reviewed the takeover.

A Hyosung TNC official said the company decided to acquire the specialty gas division as the business has significant potential as a future growth driver.

“Given that our main spandex business is highly sensitive to market fluctuations, we were looking for a complementary business to mitigate potential risks. We hope to create synergy by utilizing our company’s global network,” he said.

SCRAPPED DEAL WITH IMM PE, STIC INVESTMENTS

The decision came after Hyosung Chemical failed to sell the business to Korean private equity firms IMM Private Equity and STIC Investments Inc.

The PE consortium reportedly wanted to buy it for a much lower price than the seller’s target of 1.3 trillion won, given its sluggish business.

IMM and STIC were known to have offered about 800 billion won to acquire the specialty gas unit.

Hyosung Chemical’s specialty gas division generated 76% of its sales from Samsung Electronics Co., the world’s No. 1 memory chipmaker, which is struggling to catch up with its smaller crosstown rival SK Hynix Inc. in the market of advanced chips such as high-bandwidth memory (HBM).

Hyosung Chemical posted an operating loss of 111.7 billion won in the first nine months of this year as the division suffered from Samsung’s business slowdown.

TO COMPLETE DEAL BY END-JANUARY

Hyosung TNC plans to finance the acquisition using its assets such as trade receivables.

The company said it will hold an extra special shareholders' meeting on Jan. 23 to seek approval for the acquisition plan. The takeover process will be completed by the end of January, it said.

Hyosung Group, a textile-to-chemicals conglomerate, wanted to keep the division – the country’s second-largest specialty gas producer – within the group to take advantage of an eventual chip industry recovery, sources said.

“We will continue to invest in the specialty gas business. Hyosung TNC aims to transform from a textile-focused company into a high-value-added materials company encompassing specialty gases,” said Hyosung TNC Chief Executive Kim Chi-hyung.

Write to Sang-Hoon Sung at uphoon@hankyung.com

In-Soo Nam edited this article.