HOUSTON—As it suggested that it might do earlier this year, Kraton Corp. has agreed to sell its Cariflex polyisoprene products business.
Petrochemical manufacturer Daelim Industrial Co. Ltd. has offered to purchase Cariflex for $530 million, Kraton said in an Oct. 30 news release.
Kraton first mentioned the possibility of divesting Cariflex in its financial report for fiscal year 2018, released in February 2019.
Cariflex is a strong specialty business with opportunities for expansion, Kevin Fogarty, Kraton CEO and president, said during a Feb. 28 teleconference.
Nevertheless, Fogarty added during the teleconference that it was reviewing strategic alternatives for Cariflex.
"By any definition, Cariflex is a specialty business," Fogarty said.
Kraton wanted to concentrate on its core businesses, whereas Cariflex is a stand-alone business with little revenue or cost overlap with Kraton's main polymer and chemical segments, according to Fogarty.
"For this reason, we believe this segment could be a strong strategic fit with several players which are better positioned to realize valuable synergies associated with it and unlock its full value," he said.
Daelim International, the purchaser of Cariflex, is the flagship company of the South Korean conglomerate Daelim Group, according to the news release. The firm is involved in the petrochemical, engineering and construction businesses, and had sales of $9.8 billion in fiscal year 2018.
"Cariflex is a global leader in isoprene rubber latex, and the combination will allow us to provide our customers with a wider range of innovative products while adding the ability to serve the medical and other high-end markets," said Sang Woo Kim, Daelim International vice chairman and CEO.
"By supporting the combined capabilities, talent and resources with continued investment to expand the business globally, we will further enhance value for our shareholders."
According to the Cariflex website, the company makes polyisoprene products for applications that require exceptional purity, comfort, protection and quality.
Because it is free of the allergenic proteins found in natural rubber, it is ideal for applications such as surgical gloves, medical stoppers, and physiotherapy and tourniquet bands, it said.
Cariflex manufactures polyisoprene latex in Brazil and Japan, and solid rubber in Belpre, Ohio, according to the website.
For 2018, Cariflex had net income of $32.7 million and pro-forma adjusted earnings before interest, tax and amortization (EBITDA) of $50.5 million, according to the news release.
Kraton will use the proceeds of the Cariflex sale mostly for debt reduction, according to Gene Shiels, Kraton director of investor relations.
The release said Kraton and Daelim expect to close the deal in the first quarter of 2020, subject to regulatory approvals and other closing conditions.