Daesung Industrial Gases' preliminary auction draws multiple bidders

A preliminary auction for selling a full stake in Daesung Industrial Gases Co., South Korea’s leading industrial gas supplier, drew multiple potential buyers from home and abroad, heating up the bidding battle.

According to investment bank industry sources on Friday, major strategic and financial investors from home and abroad including Korean conglomerates SK Group, Hyosung Group, and multinational private equity fund Blackstone Group L.P. reportedly submitted a tender for the preliminary auction on Daesung Industrial Gases whose full stake is placed up for sale.

The gas supplier is owned by a consortium led by global investment banker Goldman Sachs and the gas supplier’s parent Daesung Group Partners Co. with 62 percent stake and 38 percent stake, respectively. Market watchers predict the gas supplier’s sale price to hover around 1.5 trillion won.

It is reported that around 10 firms including Air Products and Chemicals Korea, a subsidiary of U.S-based Air Products and Chemicals Inc. and Korea’s second largest industrial gas supplier by market share, global investment firms Carlyle Group and KKR & Co. have expressed their interests in the buyout deal, and a significant number of them submitted preliminary bids.

The sellers are scheduled to shortlist preferred bidders within next week and offer a five-week due diligence period afterward.

Daesung Industrial Gases is the country’s leading industrial gas provider and one of Daesung Group’s key subsidiaries. The gas supplier posted 53.9 billion won (46 million) in operating profit last year and its earnings before interest, taxes, depreciation and amortization (EBITDA) are estimated to reach up to 150 billion won this year.

SK Group who has been named as one of the strong contenders in the bidding race on Daesung Industrial Gases by industry circles reportedly took a part in the preliminary auction in hope to create synergy effects with SK Materials Co., an advanced materials producing unit that the group acquired early this year. The firm this year has focused its investment on its key industrial gas product nitrogen trifluoride (NF3) and precursors - materials that ensure an even distribution of chemical compounds used in a semiconductor.

The group also acquired industrial gas company SK Airgas Co. in March and established a joint venture SK Trichem with Japan-based Tri Chemical Laboratories Inc. in May this year to develop and produce precursors.

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