DK O&T sale may fetch STIC $300 mil Domestic oil refiners and financial investors show interest
Translated by Kim So-in 공개 2021-08-17 08:06:47
이 기사는 2021년 08월 13일 07:56 thebell 에 표출된 기사입니다.
South Korea’s largest vegetable oils and animal fats manufacturer Dae Kyung Oil & Transportation (DK O&T) is expected to fetch a higher price than initially expected as investors show strong interest in the company.STIC Investments, which is selling DK O&T, and the sale manager BoA Merrill Lynch have been tapping various potential buyers, industry source said on Wednesday. They are expected to distribute teaser letters next week and hold the public auction in early September.
Potential buyers for the company include domestic oil refiners like SK Energy, S-Oil, and Hyundai Oilbank, and several financial investors that have interests in ESG (environment, social, governance) portfolio. Domestic refiners are reportedly moving fast to have an edge over others to capitalize on DK O&T’s business, which produces eco-friendly energy using animal and vegetable oils.
DK O&T is the country’s largest animal fats manufacturer with a market share of around 40%. Market players are paying attention to the company’s ability to produce hydrotreated vegetable oil (HVO), which is fossil-free, low carbon drop-in diesel replacement product made from 100% renewable waste, residues, and vegetable oils.
DK O&T was put up for sale in March, but the sale was pushed back to the second half as the seller and a potential buyer failed to narrow a valuation gap.
Back then, the sale price of DK O&T was estimated to be around 250 billion won ($215 million), but the company reportedly needed more time to adjust the price as it didn’t properly reflect its positive performance in recent years and the ESG premium.
The company’s corporate value is estimated at around 326.5 billion won after applying the seller’s desired enterprise value/earnings before interest, taxes, depreciation and amortization (EV/EBITDA) multiple of about 15 times. The corporate value reflecting the company's earnings in the first half is highly likely to jump even higher.
DK O&T’s revenue surged 44% from 229.5 billion won in 2018 to 331.5 billion won in 2020. Its operating profit grew from 6.2 billion won to 16.6 billion won and its EBITDA increased from 11.1 billion won to 21.8 billion won during the same period.
STIC Investments acquired a 70% stake in DK O&T for 94.5 billion won in June 2017. A 100% stake in DK O&T, including 70% owned by STIC Investments and 19.72% owned by former CEO Kim Chang-yoon, is on the market. (Reporting by Ha-ha Suh)
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