US speciality chemicals company Kraton Corporation has agreed to sell its Cariflex business unit, a maker of isoprene rubber latex, to South Korean petrochemical and engineering & construction company Daelim Industrial for US$530 million.
The transaction is expected to close in the first quarter of 2020, subject to customary regulatory approvals and other closing conditions as set forth in the purchase and sale agreement. Cariflex contributed US$50.5 million of pro forma Adjusted EBITDA for the fiscal year ended December 31, 2018.
“Cariflex is an attractive business with a robust growth profile and pro forma Adjusted EBITDA margins in excess of 30%. We undertook the strategic review of the Cariflex business to explore the possibility of unlocking value for the benefit of our shareholders, as we felt the intrinsic value of the Cariflex business was not appropriately reflected in Kraton’s overall valuation,” said Kevin M. Fogarty, Kraton’s President/CEO.
“Cariflex is a global leader in isoprene rubber latex and this combination will allow us to provide our customers with a wider range of innovative products while adding the ability to serve the medical and other high-end markets,” said Sang Woo Kim, Vice Chairman/CEO of Daelim. “We are delighted to welcome Cariflex employees to the team and will work together for a seamless transition and integration of the business. By supporting the combined capabilities, talent, and resources with continued investment to expand the business globally, we will further enhance value for our shareholders.”
J.P. Morgan Securities LLC acted as exclusive financial advisor to Kraton and Baker McKenzie served as legal advisor. UBS Securities LLC acted as exclusive financial advisor to Daelim and Paul Hastings LLP acted as legal advisor.