Arkema to Acquire Majority Stake in PI Advanced Materials for €728 Million

On June 28th, Arkema announced that it plans to acquire a 54% stake in the Korean-listed company PI Advanced Materials (PIAM) held by Glenwood Private Equity for an enterprise value of €728 million and consolidate its financial statistics into Arkema's financial statements. The valuation of the transaction is about 20 times the average pre-tax profit of PIAM's earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2021/2022, or 8 times the target EBITDA in 2027, including a synergistic value of €30 million.

PIAM, formerly known as SKC Kolon PI, is a joint venture established by South Korean companies SKC Ltd. and Kolon Industries Inc. in 2008. PIAM now holds over 30% of the global market share for polyimide (PI) and is a global leader in PI films used in flexible printed circuit boards and graphite thermal sheets, with annual sales of over €200 million and an EBITDA profit margin of about 30%.

Arkema estimates that PIAM's sales are expected to grow at a rate of about 13% per year in the coming years. This is due to the company's innovative technology, successful customer experience in 5G antennas and high-resolution OLED displays, and strong growth in application areas such as flexible screens. In the electric vehicle market, strong demand for products such as battery insulation tape, soft circuit boards for battery management systems, and varnish for high-voltage motor coils will also drive PIAM's growth.

Arkema stated that this transaction is in line with Arkema's strategy and will create strong synergies. Given PIAM's first-class innovation capabilities, ultra-high-performance product portfolio, and leading position, this project fully meets Arkema's grand goal of becoming a pure specialty material producer and seeking development in high-growth application areas supported by major trends. The project has generated significant synergies, which are estimated to be approximately €30 million at the EBITDA level and are expected to be gradually realized over the next five years with limited additional capital support requirements. These synergies are driven by the excellent complementary nature of the product range after the acquisition, Arkema's geographical coverage, and PIAM's strong and close customer relationships in Asia.

Arkema also stated that this transaction requires approval from Chinese and Korean antitrust agencies and is expected to be completed by the end of 2023.