(Seoul=Yonhap Infomax) Pil Joong Jeong – The Korea Fair Trade Commission (KFTC) announced on the 26th that it will conduct a preliminary review of the proposed merger between Lotte Chemical Corp. and HD Hyundai Chemical Co., marking the first business restructuring case in South Korea's petrochemical industry.


The transaction involves Lotte Chemical physically spinning off its Daesan plant, after which the newly established entity will merge with HD Hyundai Chemical, with HD Hyundai Chemical as the surviving company.


Lotte Chemical plans to acquire additional shares in the merged entity, resulting in HD Hyundai Oilbank Co. and Lotte Chemical each holding a 50% stake in the new company.


[Source: Korea Fair Trade Commission]
[Source: Korea Fair Trade Commission]


Since announcing the "Petrochemical Industry Competitiveness Enhancement Plan" in December last year, the KFTC has actively engaged with industry stakeholders to support business restructuring and has developed tailored support measures to facilitate such efforts.


Specifically, the KFTC has provided individual pre-consulting sessions to address risks of unfair collusion arising from information exchanges during restructuring discussions, clarifying the scope and methods of permissible information sharing.


The KFTC has also encouraged companies entering merger review procedures to utilize the pre-consultation system, which allows for the submission of M&A-related documents and early communication with the regulator prior to formal notification, thereby shortening the review period.


In addition, the KFTC explained that it has cooperated with the Ministry of Trade, Industry and Energy to support the enactment of the Special Act on the Petrochemical Industry, which includes special provisions for mergers and joint conduct.


These efforts have enabled the current preliminary review of the Lotte Chemical–HD Hyundai Chemical merger.


Given that the signing of the main contract and the formal merger notification are expected to take place next year, the KFTC is encouraging early submission for preliminary review to expedite the process.


The KFTC stated, "It is essential for companies to actively utilize the pre-consultation and preliminary review systems and to submit all necessary documents promptly and thoroughly," adding, "Business restructuring by major petrochemical companies has far-reaching impacts across the entire value chain, adjacent markets, and counterparties including SMEs, and therefore requires even more rigorous scrutiny."


joongjp@yna.co.kr


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