M&As: DuPont to sell major stake in Delrin acetal for US$1.8 bn; Lotte Chemical divests ethylene oxide jv to Sanjiang

Materials maker DuPont has agreed to sell an 80.1% stake in its Delrin resins unit to private equity firm TJC, formerly known as The Jordan Company, in a deal that values the business at about US$1.8 billion.

Delrin, an acetal homopolymer with higher tensile strength, is said to be a preferred substitute for metal parts and used in products ranging from gear wheels to insulin pens.

DuPont is expected to receive cash proceeds of about US$1.25 billion and a note of US$350 million after the deal's close, which is expected around the end of the year.

It will also own a 19.9% non-controlling interest in the unit, which the company had been looking to divest since February last year.

The deal marks another step towards CEO ED Breen's goal of doubling down on DuPont's electronics and water solutions businesses.

The company has been tweaking its portfolio to focus on high-margin operations and fast-growing industries such as electric vehicles, 5G and clean energy.

"Today's announcement largely completes our planned exit of the former M&M (Mobility and Materials) segment, advancing our position as a premier multi-industrial company," DuPont's CEO Ed Breen said in a statement.

The company sold most of its mobility and materials business to compatriot chemical firm Celanese for US$11 billion last year.

However, it also suffered a setback last year as Chinese regulatory hurdles forced it to scrap the US$5.2 billion acquisition of engineering materials maker Rogers.

Earlier this year, peers Univar Solutions and Chase Corp had been taken private by Apollo Global Management and KKR, respectively.

In other news, South Korea’s Lotte Chemical Corp. has divested all shares it owns in Chinese joint venture Lotte Sanjiang Chemical Co. The petrochemical company has sold the non-core asset to its Chinese partner Sanjiang Chemical Co. The two firms established the 50:50 jv with a capital of around US$134.8 million in 2010. Terms of the deal were not disclosed.

Based in Jiaxing, Zhejiang Province, the jv set up a local plant to produce ethylene oxide, a key material for the synthesis of ethylene glycol that is used for production of polyester, polyethylene terephthalate (PET) and liquid coolants.

Lotte Sanjiang Chemical suffered a US$10 million operating loss in 2021, due to an excess supply of ethylene oxide from local competitors.

The Korean company has sold the shares for far less than the amount it invested as the Chinese jv has impaired capital, according to sources.

The jv also established another factory to use its ethylene oxide and manufacture ethanolamine in the same year. Ethanolamine is a key ingredient for making surfactants and pharmaceuticals and is an agent for softening leather.

Ethylene oxide prices have plunged for years with the expansion of Chinese chemical firms' manufacturing facilities.

Lotte Chemical has forecast the markets of the chemicals won’t rebound as its competitors will increase supply in China’s economic recovery. The company has decided to sell off the jv and spur businesses in high value-added industries.

(PRA)

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