Private equity firm KKR & Co. Inc. has taken LCY Chemical Corp. private in a stock exchange and purchase transaction that values the Taiwanese polypropylene producer at TW$47.8 billion (US$1.56 billion).
As a result of the deal, Taipei-based LCY has been delisted from the Taiwanese Stock Exchange, the company announced. On Jan. 24, LCY was dropped from the S&P Global Broad Market Index.
In July 2018, a consortium led by New York-based KKR agreed to acquire all of LCY's shares for TW$56 (US$1.82) per share in cash. The consortium includes descendants of company founder Lee Kuan-Chih, a company spokeswoman said.
LCY will keep its corporate headquarters in Taipei, its ISO-14001-certified production plants in Taiwan, China, and the United States and its current worldwide distribution and sales networks.
LCY acquired LCY Elastomers LP in Baytown, Texas, in 2004. It is also partial owner of a plant in Qatar that produces methanol and methyl tertiary-butyl ether.
KKR, which is looking for investment opportunities in Asia, made its investment from its Asian Fund III.
"KKR has a demonstrated track record of supporting the growth and success of companies globally and we want to leverage their expertise to accelerate our strategy and enable us to better anticipate and meet the evolving needs of our customers in Taiwan and worldwide." LCY Chairman T.H. Hong said.
Hong has been chairman since August 2017.
Founded in 1965, LCY makes polypropylene, polypropylene fibers, performance composites and thermoplastic elastomers as well as methanol, solvents, electronics-grade chemicals and rubber.
For third quarter 2018, ending Sept. 30, LCY announced sales of TW$13.4 billion (US$435 million), up from TW$ 11.8 billion (US$383 million) in the year-before period. Net profit dipped to TW$242 billion (US$78.7 million) from TW$1.07 billion (US$34.8 million) in the third quarter of 2017.
KKR estimates that prior to the July deal, LCY shares were trading about seven times 2017 earnings before interest, taxes, depreciation and amortization, compared to more than 10 times for shares at other global petrochemical companies.
LCY's share price has languished since then. Then-Chairman Bowei Lee "solemnly apologized to society" after a 2014 propylene line explosion in Kaohsiung, Taiwan, killed 32 people, included seven firefighters, and injured more than 300. In April 2018, Lee was among 12 city officials and company managers sentenced to jail time for the explosion.