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Lotte signs W2.7tr deal to acquire Iljin Materials

Oct. 11, 2022 - 15:08 By Son Ji-hyoung
This photo shows the production process of copper foil (Iljin Materials)

South Korean business conglomerate Lotte Group has signed a deal to acquire a controlling stake in Iljin Materials, a copper foil supplier to electric vehicle battery makers for 2.7 trillion won ($1.9 billion), in Lotte's move to enhance the EV component portfolio, filings showed Tuesday.

Lotte Battery Materials USA, a subsidiary of Lotte's petrochemical arm Lotte Chemical, will buy a 53.3 percent stake, or 24.6 million ordinary shares, in the world's fourth-largest copper foil manufacturer from Chief Executive Officer Huh Jae-myung and two other shareholders.

The deal will give Lotte Chemical the rights to exercise stock warrants to buy an additional 5 million shares. According to the filing with the Financial Supervisory Service, the deal is expected to close by February 2023.

Lotte Chemical said in the filing that the acquisition is meant to expand its battery material business. It has earlier pledged to invest 4 trillion won in the field of secondary battery materials by 2030. Most recently, Lotte Chemical's US arm in July announced a plan to build a battery material plant in Kentucky by 2025 that could manufacture 36,000 metric tons of aluminum foil.

Iljin Materials logged a 46.8 billion won operating profit in the first half of this year, up 33.5 percent from the previous year. It holds a 13 percent of market share in the world by sales of copper foils for EV batteries, followed by Korea-based SK Nexilis and Chinese rivals Watson and Chang Chun, according to SNE Research.

Iljin Materials has supplied the battery material to Korean lithium-ion battery makers LG Energy Solution and Samsung SDI. It boasts some 60,000 tons of copper foil production capacity annually, with manufacturing plants in Malaysia and Korea. The company plans to add 230,000 tons of capacity by 2027.

As of 2 p.m., Lotte Chemical was trading 1.3 percent lower than the previous closing price on the Korea Exchange. Iljin Materials shares were trading 2.2 percent higher.