Some large private equity fund (PEF) managers have joined the preliminary bidding for the sale of Kolon Industries' materials division, weighing a potential acquisition. Kolon Industries is pursuing a carve-out sale of its printed circuit board (PCB) and display materials division. The deal structure and price are said to remain fluid.
According to the investment banking (IB) industry Sunday, Skylake Equity Partners, a domestic PEF manager, has submitted a letter of intent (LOI) to Samjong KPMG, the sale advisor for Kolon Industries' division, and is reviewing an acquisition. In addition, some large domestic and overseas PEF managers plan to participate in the preliminary bidding, which is scheduled to close this week. Samjong KPMG has reportedly contacted a small number of financial investors (FIs) that have shown interest in joining the bidding behind the scenes, omitting the distribution of an information memorandum (IM) and proceeding with the sale process.
The sale target is the printed circuit board and display materials division. Kolon Industries produces specialty epoxy resins for copper clad laminate (CCL), a core material for printed circuit boards. In the display coating liquid business, it produces overcoat (transparent protective film) products for the planarization and pixel protection of organic light-emitting diode (OLED) panels. Both businesses have stable profit structures, but they were classified as sale targets to secure cash for strengthening future advanced materials businesses.
Among the printed circuit board materials produced by Kolon Industries, the business related to modified polyphenylene oxide (mPPO) was reportedly excluded from the sale. Modified polyphenylene oxide is a high-value-added product with excellent power-saving performance and is classified as a material for artificial intelligence (AI) semiconductors. As a business that could grow rapidly with the expansion of the AI semiconductor market, it appears not to have been included in the carve-out target.
The structure and price of this carve-out deal remain fluid, and there is also discussion of the possibility of withdrawing the sale if the conditions offered by buyers do not meet expectations. Depending on negotiations with FIs, there is also a possibility that businesses other than printed circuit boards and displays could be included in the sale target.
"With the two divisions posting stable earnings, this is an asset that large PEFs can certainly examine," an IB industry official said. "If we submit a letter of intent and are selected for the shortlist, we plan to conduct due diligence and review whether to proceed with the acquisition."
