SKC and PIC establish JV for propylene oxide
August 13, 2019 - South Korea
South Korea's SKC Co. (SKC) and Kuwait's Petrochemical Industries Company (PIC) have signed agreements for the sale of 49 per cent stake in SKC’s chemical business to PIC, including propylene oxide (PO) and propylene glycol (PG). SKC will vertically spin-off its chemical business and sell 49 per cent share in the new entity to form a joint venture with PIC.
The joint venture includes a 45 per cent stake in SKC Evonik Peroxide Korea. SKC and PIC have agreed the enterprise value for the joint venture company of $1,195 million.
"SKC has a strategy to achieve an annual production target of 1 million tons of PO. SKC believes this joint venture will facilitate the exploration of future opportunities and is an important step towards its strategy," the company said on its website.
The transaction will enhance PIC’s capacity in downstream derivatives and is an important step towards achieving Kuwait Petroleum Corporation’s (KPC) 2040 petrochemical strategy.
The joint venture is based on the long-term trust developed through multiple strategic cooperatives between KPC, PIC’s parent company, and SK Group. SKC and PIC aim to explore opportunities to further develop their PO business globally through the joint venture.
“SKC has consistently worked towards transforming its business model towards high value added materials, and will continue to focus on high value added specialty products to become the global top-tier PO player through this global joint venture,” said SKC CEO Wanjae Lee.
"We are extremely pleased to have this strategic partnership with SKC, which is one of the leading producers and marketers of specialty chemicals. We have a shared vision to explore opportunities to expand this partnership globally. This partnership is aligned with PIC’s global expansion strategy into downstream derivatives," said PIC CEO Mutlaq Rashed Alazemi.
The transaction is expected to close in Q1 2020, subject to customary closing conditions and regulatory approvals.
PO is a base material for PPG (polyol) used in interior materials for automobiles. (RKS)