DL Chemical to buy Kraton in an all-cash deal with enterprise value of about $2.5 billion

DL Chemical, the South Korean comprehensive petrochemical company, is set to acquire Kraton, the Houston, Texas, headquartered biobased chemical manufacturer. It was reported that it would be an all-cash deal with an enterprise value of about $2.5 billion.

According to Korea Herald, DL Chemical revealed on Tuesday, Sept. 28, that it will buy Kraton to boost its presence in the United States as well as the European markets. The two firms entered into a definitive merger agreement pursuant to which the Korean firm will buy 100% of Kraton.

DL Holdings will buy the full stake at $45.60 per share of Kraton common stock. DL is set to invest $2.5 billion in all since it will also take over Kraton’s net debt amounting to $900 million.

“Following an extensive review of a wide range of strategic alternatives focused on maximizing value for the benefit of our stockholders, Kraton’s Board has determined that the sale of Kraton to DL Chemical is in the best interest of Kraton stockholders,” Kraton’s president and chief executive officer, Kevin M. Fogarty, said in a press release.

He went on to add, “We believe the transaction provides immediate and certain value for Kraton stockholders and represents an attractive premium of approximately 50% over Kraton’s unaffected market valuation as of early July. Moreover, we believe DL Chemical has the industry presence and resources to continue to support the growth of Kraton’s business on a global scale.”

Pulse News reported that the Korean chemical company has plans of actively localizing key materials based on Kraton’s more than 800 patents. It was noted that today, just a small number of advanced countries are leading the development of new materials, so the majority of countries are heavily relying on imports of new materials.

For this, DL Chemical is planning to secure more original technology and expand investment to create a new materials industry ecosystem. Finally, the firm is likely to take the lead in the global styrene butadiene copolymer (SBC) plastic market with its acquisition of Kraton.