US specialty chemical company Kraton has agreed to sell its Cariflex business to South Korean petrochemical group Daelim Industrial for $530 million.

The transaction, which is subject to regulatory approvals and other closing conditions, is expected to complete in the first quarter of 2020.

“Cariflex is a global leader in isoprene rubber latex and this combination will allow us to provide our customers with a wider range of innovative products while adding the ability to serve the medical and other high-end markets,” said Daelim’s CEO and vice chairman, Sang Woo Kim.

Kraton announced in February that it was reviewing alternatives for its Cariflex business. At the time, president and CEO Kevin Fogarty said Cariflex was for the most part a standalone business at Kraton with minimal revenue or cost overlap with the group’s polymer and chemical segments.

Fogarty commented: "Cariflex is an attractive business with a robust growth profile and pro forma adjusted EBITDA margins in excess of 30%. We undertook the strategic review of the Cariflex business to explore the possibility of unlocking value for the benefit of our shareholders as we felt the intrinsic value of the Cariflex business was not appropriately reflected in Kraton's overall valuation.”

Cariflex contributed $50.5 million of pro forma adjusted EBITDA for the fiscal year ending Dec. 31, 2018.

Kraton will use the sales proceeds to strengthen its balance sheet and reduce debt, positioning the company for future growth in its core polymer and chemical businesses.

The Houston-based company announced in March that it had approved the construction of a   semi-works flexible Cariflex latex unit in Paulinia, Brazil. Construction is scheduled to complete by the first quarter of 2020 and be ready for commissioning during the second quarter of 2020.