Hanwha acquisitions get gov’t nod

The government approved Hanwha Group’s acquisition of a Samsung chemical unit on the condition that the takeover would not create a monopoly in the chemical industry.

The state-run Fair Trade Commission issued a statement Thursday saying it will allow two Hanwha affiliates, Hanwha Chemical and Hanwha Energy, to take over stakes of Samsung General Chemicals.

Hanwha Chemical reported in December 2014 to the government a plan to acquire a 27.6 percent stake in Samsung General Chemicals, while Hanwha Energy would buy an additional 30 percent.

Hanwha Group has spent 1.6 trillion won ($1.45 billion) on acquiring a total of 81 percent of Samsung General Chemical with its affiliate Samsung Total Petrochemicals, including the 57.6 percent taken by the two Hanwha affiliates.

According to the commission, Hanwha Group will have the largest market share in the petrochemical industry, which will have an impact on the markets for four chemicals.

Among the four, Hanwha will have a 68 percent market share in EVA (ethylene-vinyl acetate) production, which would provide a legal justification for the government to prevent such dominance.

Previously, there were four players in the EVA market, the commission said, including Hanwha Chemical and Samsung Total.

But with the takeover of the Samsung affiliate, the number is reduced to three.

Considering the fact that EVA products by Samsung Total and Hanwha Chemical were superior to those by the other two players, the acquisition raises concerns over a monopoly in the market, the commission said in the statement.

Over the next three years, if export prices of EVA products are increased on overseas markets, Hanwha Chemical should raise domestic prices of its EVA products at a slower rate than that of the exports, it said.

If export prices go down for the next three years, it should cut domestic prices at a slower rate than that of exports, the commission said.

Every half quarter, the two Hanwha units should submit a regular report to the commission on whether they are maintaining their legal duties.

The commission said the markets of the other three chemical products will not be as heavily affected by the takeover, as the market shares of the two Hanwha operations are less than 35 percent each in the three markets. The three markets all had other leading players as of December 2013, the commission said.

BY KIM HEE-JIN [kim.heejin@joongang.co.kr]