Samyang named as SCPE partner in Korean packaging deal

Samyang said it would merge its packaging business with Asepsys Global, the vehicle SCPE set up to acquire the Hyosung assets. Local media reported that Samyang will hold a 51% stake in the merged entity. The reports added that the Hyosung executives responsible for the deal were not aware of Samyang's involvement until documentation was signed.

In October, Hyosung announced it would divest the packaging business - Packaging PU - to strengthen its balance sheet and facilitate restructuring. While SCPE was identified as the buyer, the size of the deal - KRW415 billion ($396 million) - fell well beyond the firm's typical range for solo transactions in Korea. No partners or co-investors were named at the time.

"The merger is expected to boost the two companies' combined business competitiveness in the food packaging market, and will allow them to develop better packaging containers and supply them to the food industry," Samyang said in a statement.

The transaction requires regulatory approval and is expected to close in the first half of next year. Samyang added that its packaging unit generated sales of KRW80 billion last year, while Asepsys Global's sales came to KRW230 billion.

Packaging PU is part of Hyosung's chemicals division. It is a leading supplier of plastic bottles to domestic beverage companies as well as global players such as Coca Cola and Pepsi Cola. The division generated sales of KRW419 billion in the second quarter of 2013 and operating income of KRW45 billion. This accounted for 12.5% of overall group sales.

Hyosung posted revenues of KRW12.6 trillion for 2013 as a whole - roughly the same as the previous year - but it made a loss of KRW236.2 billion compared to a profit of KRW141.6 billion in 2012. The company, which has wide-ranging interests, is one of a number of Korean conglomerates selling off non-core assets in order to ease their debt burdens or as a result of political pressure.

Founded in 1924, Samyang's businesses cover food, chemicals, pharmaceuticals and information technology. The company recorded sales of KRW2.3 trillion in 2013, up 24.95% year-on-year, and a net loss of KRW26.2 billion, compared to a profit of KRW129.7 billion in 2012. The loss was blamed on sluggish domestic markets ad a global recession in the petrochemical industry.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Buyouts
• Industrials
• North Asia
• buyout
• manufacturing
• South Korea
• Standard Chartered Private Equity