South Korea's SK General Chemicals is abandoning common chemicals and turning to higher-end and more selective functional polymer business.
The board of directors recently approved the expenditure plan and issued 144 million euros (157 million US dollars) of new shares to complete the transaction to acquire the functional polymer business from the French chemical company Arkema for 335 million euros.
The latest fundraising will increase the equity capital of its French subsidiary SK Functional Polymer by 144 million euros to support its acquisition of Arkema's functional polymer business.
SK Comprehensive Chemical announced the plan last October. It will acquire the functional polymer business of the French chemical company Arkema for 335 million euros. The company will acquire three polymer manufacturing facilities and four packaging technologies from France by April.
An official of the company said: "This acquisition will lay the foundation for entering into a high value-added packaging business."
While expanding its high-value-added product portfolio, SK General Chemicals has been dealing with businesses with low profit margins and crowded markets.
It sold its heat-resistant polyethylene production subsidiary SK Golden Tide Plastics and specialty chemical manufacturer Huan Specialty Chemical. Market observers expect that the company's only Chinese subsidiary that produces synthetic rubber will also be sold.
The company is actively reorganizing its business portfolio, because in the case of low entry barriers, due to the influx of new competitors, in South Korea and China, the competition for naphtha cracking business to produce basic materials for the petrochemical industry is becoming increasingly fierce. According to sources, the business accounts for almost 70% of SK's overall chemical sales. The increase in supply led to a sharp drop in the price of basic materials. The company created the lowest operating profit since 2016 last year.
In order to improve profitability, SK Integrated Chemical announced in 2017 that it will grow its packaging and mobile business as its next growth engine. The company acquired Dow DuPont's ethylene acrylic acid and polyvinyl chloride in 2017, and plans to take over the production of Arkema's functional polymers to ensure packaging technology. South Korea is completely dependent on imported high-performance polymers, which are mainly used as adhesives for multilayer packaging.
After developing high-crystalline polypropylene plastics (HCPP) for automotive interior and exterior parts, the company also expanded its automotive business. The environmentally friendly HCPP uses 10% less plastic than traditional polypropylene, which can help reduce the weight of medium-sized cars by as much as 10 kg.