DL Chemical, the world’s largest producer of polybutene, said Tuesday it will acquire Texas-based specialty chemical manufacturer Kraton for $1.6 billion to bolster its presence in the US and European markets.

According to the subsidiary of South Korea’s DL Holdings, it will purchase the full stake of Kraton at $45.60 per share. DL will spend $2.5 billion in total, as it will also take over the US firm’s net debt of $900 million.

The acquisition will allow DL Chemical to make a foray into the US and European SBC markets, where Kraton holds the largest market share. Globally, the firm commanded 23.3 percent of the global SBC market last year.

SBC, short for styrene butadiene copolymer, is a plastic utilized as a raw material for hygiene adhesives, medical goods, automotive interior parts and 5G cables.

Utilizing byproducts generated from pine tree pulp production as raw materials, Kraton also produces 700,000 tons of sustainable bio-chemical products a year, including biodiesel, tire materials and eco-friendly adhesives.

Last year, Kraton generated $1.5 billion in revenue and $262 million adjusted earnings before interest, taxes, depreciation and amortization, with 13 manufacturing facilities and five research and development centers spread across the world.

Due to the pandemic, however, Kraton last year hemorrhaged a consolidated net loss of $221.7 million, swinging into the red from a net income of $55.8 million a year prior and opening up a window for DL Chemical to snatch up the financially struggling firm.

“By commercializing innovative products under development by Kraton, DL Chemical will localize supply chains dominated by a handful of technologically advanced nations such as the US, Japan and Germany and push forward with aggressive investments in the Asian market,” said Kim Sang-woo, vice chairman and chief executive of DL Chemical.

The acquisition will allow DL Chemical to absorb more than 800 patents owned by Kraton and lay down the foundation for the firm’s goal to enter the list of the world’s top 20 petrochemical companies.