Electric Vehicle Material Key Company Iljin Materials Pursues Sale

Stock Price Plummets Up to 14% Amid Uncertainty

[Asia Economy Reporter Kwak Min-jae] Iljin Group, a parts and materials specialized company, has started the sale of management rights of its core affiliate Iljin Materials. Iljin Materials is a company that produces copper foil (elecfoil), a key material for secondary batteries. Although its sales last year were about 688.9 billion KRW, the company's market capitalization is around 4 trillion KRW.

According to Iljin Group on the 25th, the largest shareholder of Iljin Materials recently selected Citi Global Markets Securities as the lead manager for the sale of shares and distributed teaser letters (investment information documents) to potential buyers. Iljin Materials announced on the 24th that its largest shareholder, who holds 53.3% of the shares, is reviewing the sale of shares to some potential buyers. This largest shareholder is CEO Heo Jae-myung, the second son of Iljin Group founder Chairman Heo Jin-kyu.

Iljin Materials, which produces materials for electric vehicle batteries, is a representative company leading the growth of the group. Therefore, the current sale plan has raised many questions. Following the news of the sale, the stock price temporarily traded in the early 80,000 KRW range on the morning of the 25th, falling more than 14% from the previous day's closing price.

Iljin Materials started mass production of copper foil for secondary batteries in Korea for the first time in 2001 through over 30 years of research and development (R&D). Copper foil for electric vehicles is a material with a thickness of less than 10 μm (micrometers), playing a decisive role in improving the performance of batteries for electric vehicles and energy storage systems (ESS). Iljin Materials has the second-largest copper foil production capacity in the world, following SK Nexilis. In the first quarter alone this year, it recorded sales of 200.1 billion KRW and operating profit of 21.6 billion KRW, with annual sales expected to reach 1 trillion KRW this year.

As the automotive industry rapidly shifts to electric vehicles, copper foil material companies are gaining attention in the recent M&A market. KCFT (now SK Nexilis) was acquired by SKC, an SK Group affiliate, for about 1.2 trillion KRW, and Doosan Solus (now Solus Advanced Materials) was sold to the private equity fund Skylake for about 700 billion KRW. These companies are classified as the top three copper foil manufacturers in Korea along with Iljin Materials.

Iljin Materials counts major secondary battery manufacturers worldwide as its clients, including domestic companies such as Samsung SDI and LG Energy Solution, as well as China's BYD and Japan's Murata. Major conglomerates like SK, LG, Lotte, and POSCO, aiming to secure new growth engines in the electric vehicle sector, are paying attention to Iljin Materials as a potential acquisition target. Iljin Materials recently became the only domestic battery material producer to participate in Volkswagen Group's electric vehicle project, valued at 93 trillion KRW. It also invested 500 billion KRW to establish a new factory in the Catalonia region of Spain.