South Korea’s building and industrial materials company KCC Corp. will sell the North American consumer sealant business of Momentive Performance Materials Inc., a U.S-based silicone manufacturer that it jointly acquired last year, at 242.8 billion won ($204.4 million) to focus on core businesses and improve financial health.
KCC said it is selling Momentive Performance Materials’s consumer sealant business in North America, including all assets and liabilities, to Germany’s Henkel AG & Company. The selling price is 242.8 billion won, and the disposal is expected to help the company better focus on its core businesses. Market analysts also expected the deal should help the company enhance its financial soundness.
KCC last year in a consortium with local private equity firm SJL Partners and ceramic wares maker Wonik QnC bought a full stake in the world’s second largest silicone maker Momentive Performance Materials at $3 billion. It was the largest acquisition deal made by a local private equity fund at that time. The Korean industrial materials maker acquired the silicon maker to secure a new growth engine but it has been grappling with greater debt burden since the takeover, which pushed up its net liabilities by 2.6 trillion won.
As of the end of March, KCC’s short-term debt amounted to 2.25 trillion won, nearly doubling cashable assets of 1.2 trillion won. Its cash flow also has decreased sharply due to the slowdown in paint and other industrial materials markets in line with the slumping automotive and construction markets. As a result, rating on KCC’s debts recently was revised down to AA- from AA.
Market expects KCC’s latest sale would help revamp the company’s financial health and also ease investors’ concerns, said an investment banker.
On Monday, shares of KCC finished up 4.78 percent at 142,500 won in Seoul.
By Kang Doo-soon and Cho Jeehyun
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