Taiwan's LCY Chemical goes private

Taipei – Private equity firm KKR & Co. Inc. has taken LCY Chemical Corp. private in a stock exchange and purchase deal that values the Taiwanese polymer producer at $1.56 billion (€1.37 billion).

With the transaction, Taipei-based LCY has been delisted from the Taiwanese Stock Exchange, the company announced.

On 24 Jan, LCY was also dropped from the S&P Global Broad Market Index.

In July 2018, a consortium led by New York-based KKR agreed to acquire all of LCY's shares for $1.82 per share in cash.

The consortium includes descendants of company founder Lee Kuan-Chih, a company spokeswoman said.

LCY will keep its corporate HQ in Taipei, its ISO-14001-certified production plants in Taiwan, China, and the US and its current worldwide distribution and sales networks.

LCY acquired LCY Elastomers LP in Baytown, Texas, in 2004. It also is partial owner of a plant in Qatar that produces methanol and methyl tertiary-butyl ether.

KKR, which is looking for investment opportunities in Asia, made its investment from its Asian Fund III.

"KKR has a demonstrated track record of supporting the growth and success of companies globally,” said LCY chairman T.H. Hong.

“We want to leverage their expertise to accelerate our strategy and enable us to better anticipate and meet the evolving needs of our customers in Taiwan and worldwide," added Hong.

Founded in 1965, LCY makes polypropylene, composites, thermoplastic elastomer and rubber materials, as well as methanol, solvents and electronics-grade chemicals.

For third quarter 2018, ending 30 Sept, LCY posted sales of $435 million, up from $383 million in the year-before period.

Net profit dipped to $7.9 million from about $34.8 million in the third quarter of 2017.

KKR estimates that prior to the July deal, LCY shares were trading about seven times 2017 earnings before interest, taxes, depreciation and amortisation.

This compared to more than 10 times for shares at other global petrochemical companies. LCY's share price has languished since then.

Then-chairman Bowei Lee "solemnly apologised to society" after a 2014 propylene line explosion in Kaohsiung, Taiwan, killed 32 people and injured more than 300.

In April 2018, Lee was among 12 city officials and company managers sentenced to jail time for the explosion.

Also back in 2014, Kraton Performance Polymers withdrew from a near-finalised deal to merge with LCY’s styrenic block copolymer (SBC) operations.

European Rubber Journal has edited and added to this Plastics News report