Two Korean strategics confirm bids for PE-owned Daesung

Hyosung and SK confirmed their interest in regulatory filings but offered no supplementary information. According to local media reports, the 100% stake in Daesung could sell for around KRW1.5 trillion ($1.2 billion), with various strategic and PE investors in the running. Prospective strategic buyers are said to include the local subsidiary of US-based Air Products & Chemicals, Korea's second-largest industrial gas producer by market share, after Daesung.

Daesung supplies general industrial gases and specialty gases to the consumer electronics, semiconductors, steel and petrochemicals industries. Samsung Electronics, SK Hynix and LG Display are among its customers. It posted KRW436 billion in revenue and KRW95 billion in EBITDA for 2013, while historical EBTIDA margins are above 20%.

The Goldman consortium acquired a 62% holding in the company for $400 million - including $200 million in convertible bonds - in July 2014, with parent Daesung Group retaining the rest. Other investors include Min-Joo Lee, ex-chairman of cable TV provider C&M Communications. Goldman previously was an investor in C&M.

Daesung Group has interests spanning energy, machinery, construction, telecom and consumer, as well as industrial gases. Like numerous other Korean conglomerates, it came under pressure due to weakness in the real estate sector, which left listed unit Daesung Industrial with heavy losses. Divesting assets was a means of servicing debts.

Daesung Group has a one-time call option on the consortium's stake in 2018 at a pre-determined valuation multiple, but it appears this will not be exercised.

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• Topics
• North Asia
• Trade sale
• Industrials
• South Korea
• Goldman Sachs
• Exit
• energy