"5 Trillion Won Valuation" SK Siltron Sale Drags On
Lackluster Interest Widens Price Gap
SK Ecoplant Subsidiary Sales Also Stalled
The sale of SK Group's assets, intended to reorganize its business structure, is not progressing as quickly as expected. This is due to a mismatch in price expectations between SK and private equity funds, which are the potential buyers, stemming from lackluster interest in the sales process. Unlike SK, which is pressed for funding, private equity funds are not in a hurry, resulting in the initiative for the sale shifting in favor of the private equity buyers.
According to the investment banking (IB) industry on July 17, the sale of SK Siltron, which is expected to fetch a price of 5 trillion won, has entered a prolonged phase. SK initially planned to receive letters of intent (LOI) by June 9 and select a shortlist of qualified preliminary bidders by the end of June, but the process is currently on hold.
This is because most of the major candidates, including MBK Partners, Hahn & Company (Hahn & Co.), IMM Private Equity (IMM PE), STIC Investments, and foreign private equity funds, who were expected to compete, have withdrawn, leaving only Hahn & Co. as a potential bidder.
The IMM·STIC consortium lost momentum as IMM withdrew. MBK was affected by the Homeplus situation, among other factors. In the case of foreign private equity funds, SK Siltron's 12-inch (300mm) silicon wafer production technology is classified as a national core technology, which has effectively excluded them from the bidding process.
With the situation unfolding this way, the industry believes that the gap in price expectations has widened. SK is reportedly expecting a corporate value of around 5 trillion won for SK Siltron, but Hahn & Co., the leading candidate, is said to be valuing the company at a lower level.
The industry expects that Hahn & Co. will have the upper hand if the sale proceeds. An IB industry insider said, "SK Siltron is the most valuable asset among those SK has put up for sale and plays a key role in restructuring the group's finances. While SK will try to employ various negotiation strategies to maximize the sale price, it will be difficult to achieve the price it wants due to the limited number of buyers."
SK Ecoplant's environmental subsidiaries (Renewus and Renewon), which are also up for sale, are facing a similar situation. Global private equity firm KKR and domestic firm STIC Investments were the final contenders, but as KKR offered a higher price than STIC, the momentum has shifted toward KKR.
Although KKR appears to be the most likely acquirer, SK has stated that it will consider additional offers until the end of this month. This is because KKR's offer is conditional, and SK believes it may fall short of the 2 trillion won in funding it is seeking. SK Ecoplant is also selling its stake in Ocean Plant, a manufacturer related to offshore wind power, but is reportedly dissatisfied with the terms offered by the four shortlisted candidates.
SK Group aims to secure 80 trillion won in investment resources by 2027 through business restructuring and operational efficiency improvements. The group plans to invest these funds in future businesses, focusing on artificial intelligence (AI) and energy as its two main pillars.
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