April 19, 2024

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Daelim Industrial’s planned acquisition of Cariflex from US-based Kraton for some $530 million will leave its credit ratings unaffected, analysts wrote in a note Nov. 1.

Moody’s Investors Service said the acquisition and the subsequent reduction of financial buffer will not either immediately affect Daelim Industrial’s Baa2 issuer rating or its stable rating outlook.

It cited Daelim’s financial capacity that would offset cash in hand that would shrink 87 percent to some 300 billion won ($256.9 million) and a higher leverage that would cause a slight increase in pro forma adjusted debt-to-EBITDA ratio to 1:2.5-2.6 over the next 12-18 months.

Cariflex polyisoprene product is considered one of the alternatives for materials for surgical gloves production. Courtesy of Kraton

“The additional debt funding required to complete the proposed acquisition will increase Daelim’s consolidated financial leverage, but the risk is mitigated by its solid financial capacity and the target’s sound business profile,” noted Sean Hwang, a Moody’s analyst.

The report came a few days after Daelim on Oct. 30 announced plans to acquire Cariflex, comprising its isoprene rubber latex production facility in Brazil, its related technology, sales license and workforce for manufacturing, research, development and sales. Daelim added it would establish a US subsidiary for the acquisition.

The deal is expected to close in the first quarter of 2020, according to Kraton.

By Son Ji-hyoung (consnow@heraldcorp.com)