Hyosung Chemical abandons sale of specialty gas unit to IMM, STIC

Hyosung Chemical Co. has failed to reach an agreement with a consortium of IMM Private Equity and STIC Investments Inc. to sell its specialty gas unit for 1.3 trillion won ($931 million). Investment banking sources attributed the breakdown of negotiations to its bleak profit outlook due to its heavy reliance on Samsung Electronics.

The South Korean chemical company said Thursday that it is currently contacting other potential buyers. The company is considering various options, including the sale of a minority stake, as part of its efforts to improve its financial structure, sources said. In July, Hyosung named the IMM-STIC consortium as the preferred buyer of the specialty gas unit.

"We had held discussions with the preferred bidder to sign an agreement to sell our specialty gas unit, but no agreement has been reached," Hyosung said in a regulatory filing on the 21st. "We are in talks with other investors to advance the sale of the specialty gas business."

Hyosung's specialty gas unit gets 76% of its revenue from Samsung Electronics, which is struggling to catch up with its smaller rival SK Hynix in the advanced chip market such as high-bandwidth memory.

As a result, the specialty gas unit's profit forecast for 2025 has fallen below that during the negotiations with the IMM-STIC consortium.

The Seoul private equity firm asked to reduce the sale price to less than 1 trillion won from the 1.3 trillion won initially proposed to reflect its bleak business outlook. But Hyosung rejected the request, according to sources.