Lotte Chemical buying 53.3 percent of Iljin Materials from chairman

Lotte Chemical CEO Kim Gyo-hyun speaks at a press conference in May. [YONHAP]

Lotte Chemical is acquiring 53.3 percent of Iljin Materials for 2.7 trillion won ($1.9 billion), aiming to be a major supplier of electric vehicle (EV) battery materials.

A purchase agreement was signed Tuesday, with the deal likely closed by the end of February.

Huh Jae-myung, chairman of the board of the company, is the seller of the shares, unloading his entire 53.3 percent stake. His shareholding was put up for sale in May, with Lotte Chemical emerging as the sole bidder as other companies and private equity firms dropped out.

KRX-listed Iljin Materials is the world's fourth-largest manufacturer of copper foil, a core component in making anodes, which are used in lithium-ion batteries for EVs.

Copper foil functions as the negative pole, which lithium ions flow toward from the positive pole as the battery releases electricity. Around 35 kilograms to 40 kilograms of copper foil is required to make an EV.

Iljin Materials currently has 60,000 tons of capacity at plants in Korea and Malaysia. It plans to build more plants in the United States and Spain to expand capacity to 230,000 tons by 2027.

It had a 13 percent market share last year, after SK Nexilis, China's Lingbao Wason Copper Foil and Taiwan's Chang Chun, according to data from SNE Research.

Iljin Materials reported 34.1 billion won in net profit in the first half, up 1.7 percent on year. Revenues came in at 388.5 billion won with 46.8 billion won of operating profit.

"Iljin Materials has various superior technologies in the copper foil industry," said Kim Gyo-hyun, CEO of Lotte Chemical. "Lotte Chemical will endeavor to expand our business capabilities in battery materials, and increase value for our shareholders and customers."

Earlier in the year, Lotte Chemical announced that it will invest a total of 4 trillion won through 2030 in its battery material business. It hopes to generate 5 trillion won of sales in the battery material business by that time.

Lotte Chemical shares fell 0.3 percent to 153,000 won Tuesday as the broader market declined about 1.8 percent. They are down about 26 percent year to date.

Shares of Iljin Materials closed up 5.2 percent. They are down 57 percent year to date.

BY SARAH CHEA [chea.sarah@joongang.co.kr]