Market Updates

Korean Consortium to Acquire Silicones Maker Momentive

September, 2018

Korean Consortium is an investment group in Korea, which is acquiring silicones maker Momentive (Waterford, New York) at a valuation of $3.1 billion together with the assumption of debt as well as pension and other post-retirement benefits. The Korean Consortium includes private equity firms such as chemical maker KCC Corporation in Seoul; Wonik QnC Corporation in Gumi, South Korea; and SJL Partners in Seoul.

Momentive is considered to be one of the largest silicones and silanes producers globally. It also has a strong foothold in the fused quartz production. Momentive net sales increased by 4% and reached $2.3 billion in 2017. Owing to the volume growth in the specialty portion of its silicones business and improved performance in quartz, the EBITDA rose to $293 million.

After the acquisition, the silicones business and quartz business will be two different entities. The silicones business will be operated by KCC Corporation and the quartz business by SJL. The silicones business accounted for 91% of sales in 2017. SJL will own half of both the businesses. The deal is expected to be completed by the first half of 2019.

The deal is an outcome of “a comprehensive review of the strategic growth and value creation opportunities available to the company,” says Jack Boss, Momentive president and CEO. “The transaction will not only allow our silicones and quartz businesses to benefit from KCC and Wonik’s industry expertise but will also further enhance Momentive global leadership position by expanding our portfolio of products, broadening our geographic reach, and strengthening our financial position.”

Momentive arose from bankruptcy protection in 2014. Its largest shareholder is a private equity firm Apollo Management, which owned roughly around 40% stake as of March 2018. Oaktree Capital Management held a 21% stake.

“As a result of this highly strategic transaction, the combined company will have superior capabilities to better compete in today’s global market.” says Steve Lim, Chairman and Managing Partner of SJL. “The combination of Momentive’s leading product portfolios, KCC and Wonik’s reach into an expanded geographical market, and SJL’s solid investment backing and private equity expertise will further position the company for long-term success.”

Vasundhra Singh,
Assistant Research Executive,
Infoholic Research