Korean Consortium Pays $3.1 Billion for Momentive
A consortium of Korean companies has agreed to buy US-based silicones and advanced materials company MPM Holdings, also known as Momentive Performance Materials, for around $3.1 billion, including assumed net debt, pension and other post-employment benefit (OPEB) liabilities.
The consortium is comprised of private equity company SJL Partners, chemical and automotive parts manufacturer KCC Corp. and Wonik QnC Corp., a manufacturer of quartz and ceramic wares for semiconductor wafers.
Momentive’s CEO and president Jack Boss said the announcement is the result of a “thoughtful and comprehensive review of the strategic growth and value creation opportunities available. The transaction,” he said, “will not only allow our silicones and quartz businesses to benefit from KCC and Wonik’s industry expertise but will also further enhance Momentive’s global leadership position by expanding our portfolio of products, broadening our geographic reach and strengthening our financial position.”
Steve Lim, SJL’s chairman and managing partner, added: “The combination of Momentive’s leading product portfolios, KCC and Wonik’s reach into an expanded geographical market and SJL’s solid investment backing and private equity expertise will further position the company for long-term success.”
The agreement has been unanimously approved by the boards of directors of Momentive, KCC and Wonik, and the deal is expected to complete in the first half of 2019, subject to regulatory approvals and customary closing conditions. It will be financed through a combination of cash and new debt that will be put in place at completion.
KCC and Wonik will own stakes of 45% and 5% in Momentive respectively, with SJL holding the remainder, according to credit rating agency Moody’s.
The agency has, however, placed KCC under review for a credit downgrade because of the debt it will take on to close the deal. “While the acquisition will improve KCC’s scale and geographic diversification, the exposure to the highly competitive and cyclical silicone business will significantly raise its business risk, compared with KCC’s existing construction materials and paint business, which exhibits good business stability,” said Moody’s analyst Sean Hwang.
Momentive was previously the silicones business of General Electric, which sold it to Apollo Global Management for $3.2 billion in 2006. The company filed for Chapter 11 bankruptcy in April 2014, emerging six months later. It also canceled two attempts at initial public stock offerings in 2012 and 2017.
