DL Group is pursuing the sale of its subsidiary DL Motors through individual contact with select potential buyers, with domestic auto parts manufacturers reviewing acquisition proposals at a transaction size discussed in the mid-100 billion KRW range based on 100% equity. The conglomerate is also advancing the sale of Carilflex, a high-value synthetic rubber and latex producer it acquired in 2020, with global private equity firms KKR and Blackstone examining the deal. The dual divestment strategy aims to exit non-core assets and concentrate resources on specialty petrochemical products, following DL Chemical's 2 trillion KRW acquisition of Kraton headquarters in 2022 that strengthened its specialty product portfolio. DL Group's financial structure requires stabilization as key subsidiary DL Chemical faces ongoing capital needs, including potential additional shareholder contributions to Yeocheon NCC — a joint venture with Hanwha Solutions under government-led petrochemical restructuring amid China-driven oversupply in commodity petrochemicals.
DL Group Pursues DL Motors Sale to Domestic Auto Parts Makers
DL Inc. is contacting a limited number of potential buyers individually to explore the sale of DL Motors. Some domestic auto parts manufacturers have received proposals and are reviewing the acquisition, with the transaction size discussed in the mid-100 billion KRW range based on 100% equity. DL Motors is headquartered in Changwon, Gyeongsangnam-do, with production facilities supplying auto parts to Hyundai Motor Group and others. The company is evaluated as having strengths in aluminum casting (die-casting) and precision machining processes. An acquisition by a similar parts manufacturer could realize economies of scale and reduce costs.
DL Motors Operations and Historical Background
DL Motors recorded revenue of 345.1 billion KRW last year but operating profit reached only 6 billion KRW. Despite diversifying its portfolio to include electric vehicle parts alongside internal combustion engine components, the company struggles to secure profitability amid intensified market competition. DL Group, with total assets of 26 trillion KRW and core businesses in construction and petrochemicals, experienced significant growth in the 1970s when Daelim Industrial (now DL E&C, DL Chemical) became the first Korean company to enter the Middle East market. The group established Daelim Industrial (now DL Motors) in 1978, entering the auto parts and motorcycle manufacturing sectors.
DL Chemical Faces Ongoing Capital Requirements
Holding company DL Inc. maintains a stable debt ratio of 10.7% as of last year, but core subsidiaries including DL Chemical face continuous capital needs. Yeocheon NCC, in which DL Chemical holds a 50% stake, had a debt ratio of 223% as of the end of Q1. DL Inc. contributed 450 billion KRW in 2021 and 177.8 billion KRW last year to improve DL Chemical's financial structure. DL Chemical is currently participating in government-led petrochemical restructuring. Depending on judgments by Korea Development Bank and creditors, additional shareholder contributions for Yeocheon NCC — jointly held with Hanwha Solutions — may be necessary.
Global PE Firms Review Carilflex Acquisition
DL Group is also pursuing the sale of Carilflex, which it previously acquired, as part of business restructuring and financial stabilization efforts. Carilflex produces high-value synthetic rubber and latex used in medical materials such as surgical gloves and syringe rubber stoppers. The company holds the number one market share in the global synthetic rubber surgical glove material market, with global private equity firms KKR and Blackstone reviewing the acquisition. DL Chemical acquired the Carilflex business unit from U.S. petrochemical company Kraton for approximately 620 billion KRW in 2020.
Strategic Focus on Specialty Petrochemicals
DL Group has pursued more active M&A moves since the 2020s following Chairman Lee Hae-wook's inauguration. DL Chemical acquired Kraton headquarters for approximately 2 trillion KRW in 2022, strengthening its specialty petrochemical product lineup. Kraton and Carilflex played a decisive role in DL Group's profitability improvement and earnings rebound in Q1. If the transactions are completed, DL Group can secure over 100 billion KRW in cash immediately for use in new M&A or R&D funding. An investment banking industry source stated that DL Group faces capital needs across the board due to the crisis in commodity petrochemicals from China-driven oversupply, and may strengthen its financial structure by selling non-core assets or attempt M&A in the specialty segment where it has achieved consecutive results recently.
FAQ
What is DL Group selling and why?
DL Group is pursuing the sale of DL Motors to domestic auto parts manufacturers at a transaction size discussed in the mid-100 billion KRW range based on 100% equity, and is also selling Carilfex to global private equity firms including KKR and Blackstone. The sales aim to exit non-core assets and focus resources on specialty petrochemical products, while stabilizing financial structure as DL Chemical faces ongoing capital requirements including potential additional contributions to Yeocheon NCC under government-led petrochemical restructuring.
How did DL Chemical strengthen its specialty petrochemicals business?
DL Chemical acquired the Carilflex business unit from U.S. petrochemical company Kraton for approximately 620 billion KRW in 2020, then acquired Kraton headquarters for approximately 2 trillion KRW in 2022. Kraton and Carilflex played a decisive role in DL Group's profitability improvement and earnings rebound in Q1, with Carilflex holding the number one market share in the global synthetic rubber surgical glove material market.
