LG Chem and Kukdo Chemicals have effectively concluded negotiations on the key terms for the sale of their bisphenol A (BPA) business in Dasan, Chungcheongnam-do. If the acquisition proposal is approved at Kukdo Chemicals' board meeting to be held in the fourth quarter of this year, the two parties plan to immediately proceed with signing the contract. Kukdo Chemicals aims to first secure a 50% initial stake and then acquire the remaining shares within three years to solidify its position as the world's No. 1 epoxy company.
According to petrochemical industry sources on the 8th, LG Chem and Kukdo Chemicals have agreed on the key conditions for the sale of the Dasan BPA business. The transaction is limited to LG Chem's Dasan BPA business and does not include the Yeosu BPA business. BPA is a commodity petrochemical product used as a raw material for polycarbonate, epoxy resin, and other products. The annual production capacity of BPA at LG Chem's Dasan plant is approximately 165,000 tons. While estimates from within and outside the securities industry place the sale price in the range of 1 trillion won, the actual amount appears likely to be lower than this figure.
The transaction involves establishing a joint venture (JV) with an initial 50-50 shareholding structure, where LG Chem and Kukdo Chemicals each hold 50% of the shares. Kukdo Chemicals will then acquire all of LG Chem's remaining shares over the next three years. This phased acquisition method is structured to disperse Kukdo Chemicals' initial financial burden.
The two parties are in final negotiations on detailed terms, aiming to sign the definitive sale contract within this year. Since the structure involves acquiring only the BPA business separately from other operations at the Dasan plant, it is understood that some matters requiring consultation remain, such as the use of shared facilities. Kukdo Chemicals plans to hold a board meeting in the fourth quarter of this year to approve the acquisition proposal and sign the final sale contract with LG Chem as soon as the remaining negotiations are concluded.
LG Chem has already explained the status of the sale promotion and future employment plans to production employees at the Dasan BPA facility. The company's policy is that employees who do not wish to transfer will be allowed to remain with LG Chem even after the business moves to Kukdo Chemicals. Following the signing of the sale contract, the company plans to convene a labor-management employment stability committee to discuss detailed conditions such as employment succession and consolation payments for employees.
If this acquisition is realized, Kukdo Chemicals will secure its production base for BPA, a core raw material, thereby strengthening the vertical integration of its epoxy resin business. Kukdo Chemicals, the world's No. 1 epoxy resin company, is currently a major customer receiving BPA supply from LG Chem. Upon completion of the acquisition, Kukdo Chemicals will be able to reduce its reliance on external procurement of raw materials and enhance supply stability. At the same time, it is expected that the burden associated with raw material price fluctuations will decrease, strengthening the cost competitiveness of its epoxy business.
Kukdo Chemicals' core epoxy business has also shown recent growth. Sales in the epoxy resin segment in the first half of this year were 112.73 billion won, an increase of approximately 44% from 78.18 billion won in the same period last year. Operating profit also rose by approximately 76% over the same period, from 35 billion won to 61.6 billion won. Since the epoxy business is essentially Kukdo Chemicals' main line of work, it is reported that the company has a strong will to complete this acquisition.
From LG Chem's perspective, this sale is an extension of its efforts to shrink its commodity petrochemical business and improve its structure by focusing on high-value-added businesses. The company anticipates that competition centered on commodity products will be prolonged due to factors such as China's expanding self-sufficiency rate and stagnant growth. Consequently, it is concentrating on cultivating semiconductors, mobility and robotics materials, and anticancer new drugs as future core businesses.
A petrochemical industry official stated, "If this transaction is realized, Kukdo Chemicals will strengthen its cost competitiveness through vertical integration of BPA raw materials, while LG Chem will accelerate the restructuring of its commodity petrochemical business and secure cash liquidity." The official added, "It is expected to be a win-win deal that brings positive effects to both companies."
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