70% Stake in SK Siltron: Multi-Trillion-Won "Big Deal"
IMM and STIC Form Consortium
Competing Against Hahn & Company and MBK Partners
IMM Private Equity (IMM PE) and STIC Investments (STIC) are once again joining forces in the race to acquire SK Siltron, one of SK Group's most lucrative subsidiaries. As these two firms team up for a multi-trillion-won "big deal," their consortium has emerged as a strong contender for the acquisition.
According to the investment banking (IB) industry on April 21, IMM PE and STIC are forming a consortium to bid for management control of SK Siltron. Previously, SK Group proposed the sale of SK Siltron's management rights to four major domestic private equity funds, including Hahn & Company and MBK Partners. After internal discussions, IMM PE and STIC decided to participate by forming a consortium.
The two companies previously joined hands in the acquisition battle for Hyosung Chemical's specialty gas division last year. They competed until the final stage of the deal. However, when Hyosung Chemical shifted from selling only a minority stake (49%) in the specialty gas division to selling its entire stake, which increased the burden of raising acquisition funds, the two firms formed a consortium.
In that acquisition process, the IMM PE-STIC consortium was selected as the preferred bidder. However, disagreements over the sale price during due diligence led to the deal ultimately falling through. Nonetheless, it is reported that both IMM PE and STIC were satisfied with their decision-making process and collaboration as a consortium during the deal.
In the current SK Siltron acquisition, both parties expect to generate synergy. IMM PE and STIC each have blind funds worth over 2 trillion won. By combining their blind funds, they can compete on equal footing with rival funds in terms of pricing power and deal completion capability.
Industry insiders believe the IMM PE-STIC consortium holds an advantage in this acquisition. Until recently, many considered Hahn & Company the frontrunner due to its history of successful deals with SK. However, the fact that Hahn & Company CEO Hahn Sangwon holds U.S. citizenship has emerged as a variable. Since SK Siltron manufactures semiconductor wafers and is considered a company possessing national core technology, a sale to an overseas entity would require strict government review.
MBK Partners is facing a complex situation due to recent issues such as the Homeplus restructuring and a management dispute at Korea Zinc, making it difficult for the firm to actively participate in the acquisition. Although MBK Partners initially joined the bidding, there is a strong expectation that they may withdraw later.
The stake up for sale this time is the 70.6% share of SK Siltron held by SK. The 100% equity value of SK Siltron is estimated at over 5 trillion won. Acquiring the stake on offer would require over 4 trillion won in funding.
SK Siltron, leveraging its robust mass production capability for 300mm wafers used in advanced semiconductors, counts Samsung Electronics and SK Hynix among its clients. Sales to Samsung Electronics and SK Hynix account for approximately 50% of SK Siltron's total revenue.
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