BGF has integrated its semiconductor materials subsidiary, KNW, directly into its corporate structure, reorganizing the group into three main divisions: retail, engineering plastics, and semiconductor materials.
On October 7, BGF announced that it will acquire 9,113,891 common shares of KNW, representing a 56.9% stake, from BGF Eco Materials.
Once the transaction is completed, KNW, previously a subsidiary, will become a direct subsidiary of BGF, while BGF Eco Specialty, which is fully owned by KNW, will transition from a great-grandchild company to a grandchild company. This change will simplify the group's governance structure from four levels to three.
The business focus will also become clearer, with BGF Retail handling distribution, BGF Eco Materials managing engineering plastics, and KNW overseeing semiconductor materials.
BGF plans to enhance investment and funding flexibility in its semiconductor materials business through this restructuring. The current structure has imposed limitations on external funding and rapid investment decisions due to holding company regulations.
BGF Eco Specialty, under KNW, is involved in the production of specialty gases and fluorine-based materials used in semiconductor processes. Last month, it completed a factory in the Ulsan Onsan National Industrial Complex with an annual capacity of approximately 50,000 tons for producing anhydrous hydrofluoric acid.
BGF Group had previously decided to invest about 150 billion won in 2024 to construct this facility. The production capacity is expected to meet half of domestic demand, and the company has indicated it is considering additional expansions of the same scale. Anhydrous hydrofluoric acid is a key raw material used in semiconductor cleaning, etching processes, lithium batteries, and refrigerants.
Historically, South Korea has relied heavily on imports for anhydrous hydrofluoric acid. Last month, KNW stated that 97% of domestic demand was dependent on imports from specific countries, and it aims to reduce supply chain risks through the Ulsan plant.
BGF has determined that long-term investments are necessary for quality improvement, production stabilization, and additional facility expansion in the semiconductor materials sector, warranting management at the holding company level.
Conversely, BGF Eco Materials, which is selling its stake in KNW, plans to use the funds to strengthen its core business competitiveness, improve its financial structure, and enhance shareholder value.
In line with global environmental regulations, it aims to expand its supply capabilities for recycled materials and enhance competitiveness in the engineering plastics sector. The company also plans to repay variable-rate borrowings early to reduce financial costs and is considering a public buyback using part of the proceeds from the sale.
Additionally, it intends to retire all 842,699 shares of its treasury stock, which represents about 1.3% of the total issued shares, next month.
A BGF representative stated, “This governance restructuring will lay the foundation for strategically nurturing future growth engines and establishing a responsible management system to maximize the capabilities of all business divisions, thereby enhancing the overall competitiveness of the group.”
* This article has been translated by AI.
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