Domestic private equity fund (PEF) operator Glenwood Private Equity (PE) will acquire LG CHEM's water solutions division, which manufactures reverse osmosis (RO) membranes for seawater desalination. The water solutions division holds the second position in the global seawater desalination sector.
On the 13th, according to investment banking (IB) industry sources, Glenwood PE will sign a stock purchase agreement (SPA) to acquire the water solutions division through a business transfer method. LG CHEM also announced that it resolved to transfer the water solutions business within its advanced materials division at a board meeting.
The LG CHEM water solutions division manufactures reverse osmosis (RO) membrane filters used for treating seawater and purifying industrial wastewater. It reported approximately 250 billion won in sales and about 65 billion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) last year. The sale price is about 1.4 trillion won, which is approximately 20 times the EBITDA.
The water solutions division secured technology through the acquisition of U.S.-based NanoH2O in 2014 and has since grown into the world's second-largest player based on its production base in Cheongju. Glenwood PE plans to invest an additional 200 billion won to expand its facilities following the acquisition of the water solutions division.
Glenwood PE is a PEF operator specialized in 'carve-out' transactions, where business sectors within large enterprises are separated and acquired. Last year, it entered the related business by acquiring LG Group's water treatment subsidiary Techross. It also acquired LG CHEM's diagnostic division, now known as Invitros.
LG CHEM explained that this is a portfolio adjustment aimed at concentrating capabilities and resources in its three core growth areas.