LG CHEM plans to sell its Water Solutions institutional sector, which focuses on the manufacturing of reverse osmosis (RO) membranes for desalination. As the petrochemical recession continues, this move is seen as a proactive restructuring to secure cash.
According to the investment banking (IB) industry on the 28th, LG CHEM has selected Glenwood Private Equity (PEF) as the preferred negotiator for the sale of its Water Solutions institutional sector. It is known that the new entity will transfer personnel and assets, after which Glenwood PEF will acquire it. Currently, this stage is before the commencement of due diligence, and both sides are expected to enter into detailed reviews soon.
LG CHEM's Water Solutions institutional sector manufactures reverse osmosis (RO) membrane filters used for desalinating seawater and treating industrial wastewater. Last year, it recorded sales of approximately 250 billion won and earnings before interest, taxes, depreciation, and amortization (EBITDA) of around 65 billion won. The sale price is being discussed at the early 1 trillion won range, which is about 20 times EBITDA.
Glenwood PEF specializes in 'carve-out' transactions, which involve the acquisition of divested business sectors within large corporations. Last year, it entered the related business by acquiring Techross, a water treatment subsidiary of LG Group. Glenwood PEF also previously acquired LG CHEM's diagnostics institutional sector, now known as Invitros.
Since acquiring U.S.-based NANO H2O in 2014 to secure technology, LG CHEM's Water Solutions sector has grown into the world's second-largest player based on production facilities in Cheongju. Through this sale, LG CHEM is expected to streamline its non-core businesses while focusing on key growth areas such as battery materials.