1 week Ago By [email protected](KoreaTimes)
Hyosung Chemical's nitrogen trifluoride plant / Captured from Hyosung Chemical's website By Nam Hyun-woo Hyosung TNC, a chemical textile subsidiary of Hyosung Group, will take over the industrial specialty gas unit of Hyosung Chemical for 920 billion won ($642.55 million), despite concerns from shareholders that the transaction could place a financial burden on the company. According to Hyosung TNC’s regulatory filing, Thursday, its board decided to acquire the unit and put it to a vote at a shareholders' meeting on Jan.
23. When the plan is approved, Hyosung TNC will set up a subsidiary tentatively named Hyosung Neochem to assume the business. The gas unit produces high-purity nitrogen trifluoride (NF3) gas, which is used as a cleaning agent in the semiconductor and display manufacturing process.
Its key clients include Samsung Electronics, SK hynix and other display makers. Since Hyosung TNC also produces NF3 gas, acquiring the unit will elevate the company to become the world’s No. 2 NF3 gas producer with 11,500 tons of capacity, Hyosung TNC said.
“Through continued investment in the specialty gas business, we will accelerate our transformation from a textile-focused company into an industry leader in high-value materials innovation, encompassing specialty gases,” Hyosung TNC CEO Kim Chi-hyung said. Hyosung TNC said it believes the acquisition will create synergies and be a sustainable growth driver for the company, but minor shareholders of the company have been expressing concerns over the acquisition because it will create a daunting amount of pressure on the company’s financial standing for the raising of funds. Read More Concerns grow over Hyosung selling struggling gas unit When rumors of the acquisition first emerged on Nov.
22, Hyosung TNC’s share price plunged 20.63 percent, dropping from 269,000 won to 213,500 won. Since then, the price has fluctuated, hovering in the low 200,000 range.
In contrast, Hyosung Chemical saw two double-digit increases on Dec. 2 and 10, as shareholders expressed optimism, believing the company had been looking to sell the unit to address its short-term liabilities. Hyosung TNC said it plans to use its trade receivables and other liquidity to finance the deal, but it looks likely that the company will have to take out loans because converting receivables into cash all at once faces limitations.
Both Hyosung TNC and Hyosung Chemical shares were halted from trading on Thursday afternoon due to the regulator’s suspension order before the acquisition announcement. Despite shareholders’ concerns and downside financial risks, Hyosung Group pursued the acquisition, betting high on the potential of the specialty gas business as a future growth driver. Hyosung TNC holds the world’s leadership position in the spandex business, but carries potential risks because it is prone to market fluctuations.
By growing the specialty gas business, which is expected to benefit from the semiconductor market’s upcycle, Hyosung TNC can expect a more stable revenue structure through a decentralized business portfolio, the company said..
