SKC of South Korea and Petrochemical Industries Company (PIC) of Kuwait have agreed to establish a propylene chemicals joint venture worth $1.2 billion. PIC will hold a 49 percent stake worth $476.2 million in the new company whereas South Korea’s SKC will hold the other 51 percent.
SKC confirmed it will spin off its operations of propylene oxide and propylene glycol. The joint venture will also obtain 45% interest in SKC Evonik Peroxide Korea, a joint venture between SKC and German chemical business Evonik that produces hydrogen peroxide.
The joint venture is based on the long-term trust developed by multiple strategic cooperative projects between Kuwait Petroleum, the parent company of PIC, and SK Group, according to SKC. Through this joint venture, SKC and PIC aim to explore possibilities for growing their propylene oxide business worldwide.
“The acquisition is part of Kuwait Petroleum’s strategy to boost its international petrochemical investments, particularly core petrochemical products with high added value,” Kuwait Petroleum’s CEO Hashem Sayyed Hashem told the media.
The agreement with Kuwait’s PIC will assist Korea’s SKC attain its objective of boosting the production of propylene oxide by 2025 to 1 million tons per year. Currently, SKC is leading the Korean propylene oxide market by controlling around 70% of the market share. The business exports worldwide to over 60 nations. Last year, SKC had revenue of $2.5 billion.
Earlier in June, SKC acquired copper foil manufacturer (for lithium-ion batteries), KCF Technologies from Kohlberg Kravis Roberts, a US-based private equity fund.
PIC is a wholly-owned Kuwait Petroleum state-run subsidiary which has been in the chemical business for a half-century. PIC purchased a 25% stake in SK Advanced, the company manufacturing propylene from SKC, in 2016.