SK Seorin Building (Image courtesy of SK Group)
SEOUL, Nov. 21 (Korea Bizwire) – As global economic uncertainties persist, South Korea’s largest conglomerates are intensifying efforts to secure cash reserves, even divesting profitable core businesses and world-leading operations to strengthen their financial positions and fund future investments.
According to industry sources on November 20, major business groups are actively selling profitable subsidiaries and flagship operations to secure stable cash flows.
SK Group has been particularly aggressive in its portfolio rebalancing this year. In September, SK Inc., the group’s holding company, selected private equity firm H&Company as the preferred bidder for its wholly-owned subsidiary SK Specialty. The parties expect to finalize the stock purchase agreement by year-end.
SK Specialty, a global leader in special gases used in semiconductor and display manufacturing, ranks first worldwide in the production of nitrogen trifluoride (NF3) and tungsten hexafluoride (WF6).
The company, one of SK Inc.’s most profitable subsidiaries, recorded sales of 681.7 billion won and an operating profit of 147.1 billion won last year. Market estimates value the 100% stake at around 4 trillion won, though SK Inc. plans to retain partial ownership.
CJ CheilJedang is pursuing the sale of its bio business division, which ironically served as the company’s founding operation. The division, valued at 5-6 trillion won, has reportedly selected Morgan Stanley as sale manager and plans to begin main bidding as early as next month.
The bio division, which primarily produces animal feed additives and food ingredient materials, holds global leadership in five of eight major feed amino acids, including lysine. Last year, it accounted for 23% of CJ CheilJedang’s total revenue and 30% of operating profit.
Lotte Chemical, struggling amid a petrochemical industry downturn, is implementing an asset-light strategy by divesting non-core assets and strategically withdrawing from certain operations. The company recently decided to liquidate its Malaysian synthetic rubber subsidiary LUSR and plans to secure 1.4 trillion won through stake sales.
The construction sector is also seeing active asset sales amid industry difficulties. Taeyoung Group sold its subsidiary Ecorbit, Korea’s largest comprehensive waste treatment company, for 2.07 trillion won in August following Taeyoung Construction’s workout program.
GS Engineering & Construction is pursuing the sale of its Spanish water treatment subsidiary GS Inima, which posted sales of 493 billion won and net profit of 52.2 billion won last year.
“As supply chain instability and economic headwinds create greater uncertainties, many companies are focusing on securing cash through stake sales,” said an industry official. “This trend of improving operational efficiency and focusing on future growth engines is expected to continue for the foreseeable future.”
M. H. Lee (mhlee@koreabizwire.com)
