SKC and PIC establishes a PO joint venture and positions the joint venture as a leading player in the global market
SKC and PIC establishes a PO joint venture and positions the joint venture as a leading player in the global marketSKC 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 based 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 player 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 player.PO is a base material for PPG (polyol) used in interior materials for automobiles and PG used in cosmetics and medicine.
SK Bioland Set to Advance into Functional Health Food Market with HyaluronAZ
● SK Bioland is due to release HyaluronAZ, a functional health food effective in improving skin health and reducing body fat, in June. ● Targeting the KRW 4 trillion B2C market with hyaluronic acid, SK Bioland’s core material ● Company aims to secure a new growth engine and enhance its corporate value by advancing into the functional health food market SK Bioland (CEO: Lee Geun-sik), a subsidiary of SKC, is set to advance into the B2C market of functional health foods with the release of HyaluronAZ. The new product’s main ingredient is hyaluronic acid, a core material of SK Bioland that has been individually acknowledged by the K-FDA. HyaluronAZ is a functional health food designed to promote Inner Beauty and is effective in improving skin health and reducing body fat thanks to its powerful antioxidant efficacy. SK Bioland is scheduled to begin selling HyaluronAZ on Hyundai Home Shopping, a representative home shopping channel in Korea, on June 18, with the aim of entering the B2C business in earnest. Customers will also be able to purchase the product easily at ‘Naver Shopping’ as soon as it is launched on the home shopping channel, while an exclusive sales site will be opened in August. Thereafter, the distribution channels will be expanded to offline channels including major department stores and duty-free shops. The name HyaluronAZ was coined to suggest that hyaluronic acid can take care of every aspect of skin health from A to Z and from head to toe. Hyaluronic acid is one of the major components of the skin, making it essential for healthy skin. As the amount in our body diminishes gradually with age, skin health should be maintained by replenishing its hyaluronic acid on a continuous basis. SK Bioland produces hyaluronic acid of the highest quality in Korea’s largest facility using the advanced fermentation technology and know-how it has accumulated over a period of twenty-five years. The company is the country’s only producer of hyaluronic acid for use in functional health foods. In 2017, the Korean Ministry of Food and Drug Safety issued an individual acknowledgement that the product is effective in protecting the skin from damage caused by UV rays. Each pack of HyaluronAZ contains 240mg of hyaluronic acid (the RDA), as well as green tea extract and vitamin C for improved skin health, reduced body fat, and an antioxidant effect. SK Bioland is advancing into the B2C business with the aim of participating firsthand in Korea’s promising functional health food market, based on its competitiveness in the production of materials. While South Korea’s functional health food market is currently worth almost KRW 4 trillion, the materials market accounts for no more than 10% of the market. Aside from hyaluronic acid, SK Bioland develops dozens of natural materials every year and has commercialized more than 200 different materials to date. The company also expects to receive individually acknowledged approvals for various materials with different efficacies from the K-FDA this year. SK Bioland now offers more of its own brand products directly to consumers. A spokesperson for SK Bioland said, “We have expanded the company’s value chain and secured a new growth engine by entering the finished product business of functional health foods with the commercial release of HyaluronAZ. We expect to revitalize the functional health food market as we are preparing to release various new products using our unique high-quality materials.” [The end]