It has been confirmed that LG Chem and Kodo Chemical have reached a final agreement on the sale of their bisphenol A (BPA) business. LG Chem is accelerating its restructuring of general-purpose petrochemical operations, while Kodo Chemical secures a production base for BPA, a key raw material for epoxy resins, thereby strengthening its vertical integration.
According to industry sources on the 22nd, LG Chem and Kodo Chemical finalized an agreement on the sale of the Dasan BPA business on the previous day. The two companies will proceed to sign the final contract after obtaining approval from their respective boards of directors.
The two companies conducted negotiations for approximately five months starting in April last year, reaching consensus on key sale terms before coordinating details such as the use of shared facilities and cost sharing. This transaction has been pursued through a structure in which a joint venture (JV) with an initial 50-50 equity split is established, after which Kodo Chemical will acquire all of LG Chem's remaining shares over the next three years. This structure allows for the gradual transfer of the business while dispersing Kodo Chemical's initial financial burden. The target of the sale is the BPA business division at LG Chem's Dasan plant in Chungnam Province, with an annual production capacity of 165,000 tons. The Yeosu BPA business is not included.
BPA is a general-purpose petrochemical product used as a raw material for polycarbonate and epoxy resins. Kodo Chemical is the world's leading epoxy resin company and currently a major customer receiving BPA supply from LG Chem. With this acquisition, it is expected that Kodo Chemical will secure its own raw material production base, thereby reducing reliance on external procurement and enhancing supply stability.
In particular, it is anticipated that the burden of raw material price fluctuations will be reduced, strengthening the cost competitiveness of the epoxy resin business. In the first half of this year, Kodo Chemical recorded sales of 112.73 billion won in the epoxy resin division, a growth of approximately 44% compared to the same period last year (78.18 billion won). Operating profit also increased by approximately 76%, from 35 billion won to 61.6 billion won.
Through this sale, LG Chem is expected to reduce its share in general-purpose petrochemicals and rapidly transition to a business structure centered on high value-added operations. Specifically, amid delayed profitability recovery for general-purpose products due to China's expanding self-sufficiency rate in petrochemical products and global oversupply, the company plans to streamline non-core businesses to improve its financial structure and secure resources for investment in future growth areas. LG Chem is cultivating semiconductors, mobility (transportation) and robotics materials, and anti-cancer new drugs as its core future businesses. The sale of the Dasan BPA business is also part of this business portfolio restructuring.
The employment issue for employees resulting from the sale remains. LG Chem previously explained the status of the sale promotion and employment plans to production staff at the Dasan BPA facility. It has been reported that the company's policy is to allow employees who do not wish to transfer to remain with LG Chem even if the business transfers to Kodo Chemical. After the final contract is signed, detailed conditions such as employment succession and consolation payments will be discussed through an employment stability committee between labor and management.
The petrochemical industry views this transaction as having a positive effect on both companies, given that it represents a business restructuring between a raw material supplier and a demand-side enterprise. One official stated, "LG Chem will secure liquidity through the sale of the BPA business, while Kodo Chemical will internalize key raw materials, thereby enhancing its competitiveness in the global epoxy resin market."
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