South Korean-based DL Chemical Co. Ltd. will acquire Houston-based Kraton Corp. for $2.5 billion in cash under a definitive merger agreement announced Monday. Kraton produces styrenic block copolymers and pine chemicals, including some used in production of lubricants.
“We believe the transaction provides immediate and certain value for Kraton stockholders and represents an attractive premium of approximately 50% over Kraton’s unaffected market valuation as of early July,” Kraton President and CEO Kevin M. Fogarty said in a news release. “Moreover, we believe DL Chemical has the industry presence and resources to continue to support the growth of Kraton’s business on a global scale.”
Last year, DL acquired Kraton’s Cariflex isoprene rubber latex business for $530 million in cash, integrating it within the DL Group. “We also have been highly interested in Kraton’s specialty polymer and biobased chemical business, and this combination will allow us to provide our customers with a wider range of innovative products, while adding the ability to serve a diverse range of end markets in over 70 countries worldwide,” Sang Woo Kim, vice chairman and CEO of DL Chemical, said in a news release.
Kraton is one of the world’s largest producers of styrenic block copolymers, which are used in a wide range of applications, including lubricants and oil field chemicals.
Kraton’s crude tall oil is a byproduct of pine wood pulping conducted by many paper mills. The pulpwood is delivered to pulp mills and is chipped and boiled with an alkali solution to produce white liquor and pulp. The water from the white liquor is evaporated then the black liquor soap is skimmed off and acidulated to make crude tall oil.
The company sells distilled tall oils under the Sylvatal brand for use in production of metalworking fluids and oil field chemicals, as well as soaps, cleaners and alkyd resins. Sylvatal tall oils contain 10%-40% rosin acids. Its Century fatty acids, which are also pine-based, are used in a wide range of industrial applications, including metalworking fluids, base oils and general lubricant applications.
Kraton acquired tall oil products maker Arizona Chemical Holdings Co. for $1.4 billion in 2015.
DL Holdings Co. Ltd., formerly known as Daelim Industrial, split-off DL Chemical last year. DL Chemical claims to be the world’s largest producer of polybutene – a polymer that is commonly used in cosmetics and beauty products but that can also be used as a viscosity index improver in such lubricants as gear oils – with production capacity of 200,000 metric tons per year.