SKC and PIC establishes a PO joint venture and positions the joint venture as a leading p_ layer_ in the global market

SKC Co. (SKC) and Petrochemical Industries Company (PIC) have signed agreements for the sale of 49% stake in SKC’s chemical business to PIC, including Propylene Oxide (PO) and Propylene Glycol (PG).

SKC’s Board of Directors have approved to vertically spin-off its chemical business and sell 49% interest in the new entity to form a joint venture with PIC.

The joint venture includes a 45% stake in SKC Evonik Peroxide Korea. SKC and PIC have agreed the Enterprise Value for the joint venture company of USD1,195 million.

SKC has a strategy to achieve an annual production target of 1 million tons of PO. SKC believes this joint venture will facilitate the exploration of future opportunities and is an important step towards its strategy.

This transaction will enhance PIC’s capacity in downstream derivatives and is an important step towards achieving Kuwait Petroleum Corporation’s (KPC) 2040 petrochemical strategy. 

This joint venture is _ base_d on the long-term trust developed through multiple strategic cooperatives between KPC, PIC’s parent company, and SK Group. SKC and PIC aim to explore opportunities to further develop their PO business globally through this joint venture.

Mr. Wanjae Lee, SKC CEO, said, “SKC has consistently worked towards transforming its business model towards high value added materials, and will continue to focus on high value added specialty products to become the global top-tier PO p_ layer_ through this global joint venture.”

Mr. Mutlaq Rashed Alazemi, PIC CEO said ”We are extremely pleased to have this strategic partnership with SKC, who is one of the leading producers and marketers of specialty chemicals. We have a shared vision to explore opportunities to expand this partnership globally. This partnership is aligned with PIC’s global expansion strategy into downstream derivatives.”

The transaction is expected to close in Q1 2020, subject to customary closing conditions and regulatory approvals.

Credit Suisse and Shin&Kim are acting as financial and legal advisors to SKC, and HSBC and Ashurst are acting as financial and legal advisors to PIC.

SKC is a leading global manufacturer of specialty chemicals, electronic materials, polyimide film and beauty & healthcare products, with annual revenue of USD2,515 million in 2018 and USD3,519 million in assets as of 1Q 2019. In the chemicals business, SKC holds the number one position in PO and PG domestically with over 70% market share, and exports its products to over 60 countries. The company has been active in investments, through landmark transactions such as the USD1,014 million acquisition of KCF Technologies (2019).

PIC is a wholly-owned subsidiary of the Kuwait Petroleum Corporation. PIC has over 50 years of experience in the chemicals industry and holds a diversified portfolio of investments in petrochemicals.

Notably, PIC holds a 42.5% stake in Equate, a joint venture established with Dow Chemical and Kuwait private sector for the manufacturer and marketing of polyolefins and ethylene glycol globally. PIC also holds 20% stake in Kuwait Aromatics Co. which owns 100% stake in Kuwait Paraxylene Production Company (“KPPC”) and 57.5% stake in The Kuwait Styrene Company (“TKSC”). PIC acquired 25% stake in SK Advanced in 2016. PIC continues to invest in growth projects both domestically in Kuwait and internationally, building a reputation as a well-established global petrochemicals p_ layer_.

PO is a _ base_ material for PPG (polyol) used in interior materials for automobiles and PG used in cosmetics and medicine.
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