By Nam Gi-hyun and Choi Mira
A Korean consortium led by domestic building and industrial materials company KCC Corp. will take over the world’s second largest silicone maker Momentive Performance Materials Inc. for $3 billion, adding a key material base for the home country which is the world’s biggest semiconductor powerhouse.
According to sources from the investment banking industry on Tuesday, the consortium of KCC, local semiconductor equipment producer Wonik Group and private equity fund SJL Partners reached an agreement to acquire a full stake in Momentive with its largest shareholder Apollo Global Management, a U.S. private equity company. The deal value is confirmed at $3 billion, the largest amount for an acquisition deal made by a local private equity fund.
Momentive is the second largest sealant maker in the world, ranked between U.S.-based Dow Corning and Germany’s Wacker. It tops the smaller ceramics and quartz market.
Four U.S.-based private equity investment companies including Apollo, Oaktree Capital Management, D.E. Shaw and Pentwater Capital Management hold a combined 75 percent stake in Momentive, of which Apollo owns the largest stake of 40 percent. The consortium plans to fully-own the company by buying out the remaining 25 percent shares from the over-the-counter market. SJL will represent the largest stake of 50 percent, KCC 45 percent and Wonik 5 percent. On Thursday, KCC shares lost 0.86 percent and closed at 346,00 won ($308.16).
“The takeover would serve as an important opportunity for the domestic semiconductor and materials market to take another leap forward,” said an official from the IB industry. “It will be an opportunity for the country to cement its dominant position in the global semiconductor equipment market amid China’s state-led efforts to boost its semiconductor industry.”
The deal would also help KCC to become the world’s second largest silicone maker, with its sales from silicone expected to surge from current 200 billion won to more than 2 trillion won. The silicone business is expected to be the company’s new growth engine that will drive its future growth.