Houston, Texas – Kraton Corp. is to sell its Cariflex business unit to Daelim Industrial Co. Ltd of Korea for $530 million (€475 million), the US polymers group has announced.
The deal is expected to close in the first quarter of 2020, subject to customary regulatory approvals and other closing conditions, according to Kraton’s 30 Oct statement.
Daelim, it noted, is a petrochemical and engineering & construction company based in Korea, which is seeking to strengthen its polymer presence globally.
The acquisition “will allow us to provide… a wider range of innovative products while adding the ability to serve the medical and other high-end markets," said Sang Woo Kim, Daelim vice chairman and CEO.
Isoprene rubber latex supplier Cariflex contributed earnings (adjusted EBITDA) of $50.5 million to Kraton’s results in 2018, its current Houston-based owner pointed out.
Cariflex has “a robust growth profile” and delivers margins of over 30%, said Kraton president and CEO Kevin Fogarty. “We felt [that its] intrinsic value was not appropriately reflected in Kraton's overall valuation.”
Proceeds from the sale, he added, “will allow us to significantly strengthen our balance sheet and improve our leverage profile, positioning us for future growth in our core polymer and chemical businesses."
Fogarty went on to praise Cariflex employees, including their efforts in developing and implementing a new ‘direct-connect’ process technology.