BGF to make KNW a subsidiary, reorganize business structure around three pillars

[Financial News] BGF will acquire the entire stake in KNW held by its subsidiary BGF Eco Materials. The move is aimed at simplifying the ownership structure of its existing materials business and reorganizing its business around three divisions: retail, engineering plastic materials and semiconductor materials.
According to industry sources on the 7th, BGF disclosed that it would purchase 9,113,891 common shares in KNW, representing a 56.9% stake, from BGF Eco Materials. Once the transaction is completed, KNW, previously a subsidiary of a BGF subsidiary, will become a direct subsidiary of BGF.
As a result, BGF Eco Specialty, a subsidiary of KNW, will also move up from being BGF’s great-granddaughter company to its granddaughter company. In effect, the four-tier ownership structure—BGF, BGF Eco Materials, KNW and BGF Eco Specialty—will be simplified to three tiers.
With this reorganization, BGF Group will have three pillars: the retail business of BGF Retail Co., Ltd., the engineering plastic materials business of BGF Eco Materials, and the semiconductor materials business centered on KNW. The move is intended to speed up investment and decision-making in the semiconductor materials business under the holding company’s responsible management, the company said.
BGF Eco Specialty, which is owned by KNW, manufactures specialty gases for semiconductors. Last month, it completed a plant at the Onsan National Industrial Complex in Ulsan with the capacity to produce approximately 50,000 tonnes of anhydrous hydrogen fluoride a year. The plan is to establish a management system at the holding-company level, given the need for investment in quality improvements, production stabilization and additional facility expansion going forward.
BGF believes the current ownership structure constrains investment decisions and external fundraising under restrictions on holding companies’ conduct in the Fair Trade Act, and that this reorganization will enable it to establish a more flexible investment structure.
BGF Eco Materials plans to use the proceeds from the sale to strengthen the competitiveness of its engineering plastic materials business, improve its financial structure and enhance shareholder value. It will also expand its capacity to supply high-quality recycled materials and pursue early repayment of its variable-rate borrowings.
It is also considering measures to enhance shareholder value, including a tender offer funded in part by the sale proceeds. BGF Eco Materials also plans to cancel all 842,699 treasury shares it holds next month. This represents approximately 1.3% of the total number of shares issued.
A BGF representative said, “This reorganization of our ownership structure will lay the groundwork for strategically nurturing future growth engines and establish a responsible management system. By maximizing the capabilities of every business division, we will strengthen the competitiveness of the group as a whole.”

[email protected] Kim Hyun-ji Reporter