SK Holdings to acquire LG full stake in wafer unit

The holding unit of energy and telecom company SK Group agreed to take over semiconductor wafer manufacturer LG Siltron on Monday, purchasing all stakes held by LG Corp., the holding company of LG Group.

LG Corp., which holds 51 percent or 34.18 million shares of LG Siltron, will sell its entire stake of 620 billion won to SK Holdings, both companies announced in a regulatory filing.

“Enhancing the efficiency of asset in order to fortify new growth engine” is the reason behind LG Corp’s decision to sell the semiconductor component-making affiliate, LG Corp. said in its filing.

LG Siltron manufactures silicon wafers which are one of the key components of semiconductors. The company sources its wafers to semiconductor companies based in Korea and abroad. It ranked fourth by market share last year in the global market in the 300-millimeter wafer sector, its main product.

LG Siltron generated 77.7 billion won ($66.5 million) in sales last year and 5.4 billion won in operating profit.

SK Group has fortified its semiconductor business since it acquired Hynix Semiconductor in 2011, which now is known as SK Hynix. The semiconductor unit has become the crown jewel of the conglomerate, reporting handsome profits in recent years.

In 2015, SK Group acquired another semiconductor entity OCI Materials, the current SK Materials.

“We are trying to expand our presence in the semiconductor material market by advancing into manufacturing and merchandising business of silicon wafers,” SK Holdings said in the filing.

LG Siltron was co-founded by Dongbu Group and U.S. chemical company Monsanto in 1983. In 1990, LG Group acquired a 51 percent stake in the company and took control of the management. Dongbu Group had been the second biggest shareholder with a 49 percent stake until 2007 when it reorganized its financial structure and handed over the shares of LG Siltron to private-equity funds Vogo Fund and KTB, both of which are Korean investment companies.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]