BGF to buy full KNW stake, cutting governance to three business pillars
In short
BGF will buy 9,113,891 KNW common shares — a 56.9 percent stake and the entire holding of subsidiary BGF EcoMaterials — according to an October 7 regulatory filing. The deal lifts KNW from grandchild to direct subsidiary of BGF and shortens the group's ownership chain from four tiers to three, leaving three pillars: BGF Retail in distribution, BGF EcoMaterials in engineering plastics and KNW in semiconductor materials. BGF said the change is meant to speed up investment decisions in semiconductor materials, where it said holding-company rules had blocked external funding.
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BGF said on October 7 that it will buy 9,113,891 common shares of KNW, a 56.9 percent stake that is the entire holding of its subsidiary BGF EcoMaterials, according to a regulatory filing. The purchase was reported by ZDNet Korea, Dong-A Ilbo, Yonhap and Seoul Economic Daily. [ 1 , 3 , 4 , 5 ]
The reports said that after the deal KNW moves from being a grandchild company to a direct BGF subsidiary, and BGF EcoSpecialty, previously a great-grandchild company, becomes a grandchild company, cutting the ownership chain from four tiers to three. The group is reorganised around three pillars: BGF Retail in distribution, BGF EcoMaterials in engineering plastics and KNW in semiconductor materials. [ 1 , 3 , 4 , 5 ]
BGF said the restructuring is meant to improve management efficiency in the semiconductor materials business and allow faster, more flexible decisions on investment and funding. Under the existing structure, the company said, rapid investment decisions were difficult and the Fair Trade Act's restrictions on holding companies made external funding fundamentally impossible. [ 1 , 4 , 5 ]
BGF EcoSpecialty, which makes semiconductor specialty gases, completed a plant at the Onsan National Industrial Complex in Ulsan in September capable of producing about 50,000 tons of anhydrous hydrofluoric acid a year, about half of domestic demand, according to the reports. Seoul Economic Daily said the material is used in semiconductor cleaning and etching as well as batteries and refrigerants, and that imports from a specific country had accounted for 97 percent of supply; the other documents do not give that figure. [ 1 , 4 , 5 ]
BGF EcoMaterials, which sold the KNW stake, plans to use the proceeds to strengthen its materials business, repay floating-rate debt early and improve shareholder value, and will cancel all 842,699 of its treasury shares, about 1.3 percent of shares issued, next month, the documents said. Seoul Economic Daily reported that the company aims to secure capacity to supply high-quality recycled materials, with the European Union set to apply rules on recycled plastic use in vehicles from 2028. [ 1 , 4 , 5 ]
A BGF official said the reorganisation is intended to build a foundation for developing future growth drivers and to establish a responsible management system, adding that the group aims to maximise capability across all business units and raise its overall competitiveness. [ 1 , 4 , 5 ]
Why it matters
BGF is moving its semiconductor materials business under direct holding-company control, a structure it says will let it decide on investment and funding faster. BGF EcoSpecialty, now a step closer to the holding company, completed a Ulsan plant in September with capacity described as about half of domestic demand for anhydrous hydrofluoric acid, a semiconductor process material. The documents give no financial terms, so the scale of the restructuring cannot be judged from them.
Key facts
- BGF will buy 9,113,891 KNW common shares, a 56.9 percent stake and the entire holding of BGF EcoMaterials. [ 1 , 3 , 4 , 5 ]
- KNW will move from grandchild to subsidiary of BGF, and BGF EcoSpecialty from great-grandchild to grandchild, cutting the ownership chain from four tiers to three. [ 1 , 3 , 4 , 5 ]
- The group will be reorganised around three pillars: BGF Retail in distribution, BGF EcoMaterials in engineering plastics and KNW in semiconductor materials. [ 1 , 3 , 4 , 5 ]
- BGF EcoSpecialty completed a plant at the Onsan National Industrial Complex in Ulsan in September with capacity of about 50,000 tons a year of anhydrous hydrofluoric acid, described as about half of domestic demand. [ 1 , 4 , 5 ]
- BGF EcoMaterials plans to use the sale proceeds to strengthen its materials business, repay floating-rate debt early and improve shareholder value, and will cancel all 842,699 treasury shares, about 1.3 percent of shares issued, next month. [ 1 , 4 , 5 ]
- BGF said Fair Trade Act restrictions on holding companies made external funding impossible under the previous structure. [ 1 , 4 , 5 ]
Confirmed by several sources
- BGF will buy 9,113,891 KNW common shares, a 56.9 percent stake that is the entire holding of BGF EcoMaterials. [ 1 , 3 , 4 , 5 ]
- KNW becomes a BGF subsidiary and BGF EcoSpecialty a grandchild company, reducing the ownership chain from four tiers to three. [ 1 , 3 , 4 , 5 ]
- BGF EcoSpecialty completed an anhydrous hydrofluoric acid plant in Ulsan's Onsan National Industrial Complex in September with capacity of about 50,000 tons a year, about half of domestic demand. [ 1 , 4 , 5 ]
- BGF EcoMaterials will cancel all 842,699 treasury shares, about 1.3 percent of issued shares, next month. [ 1 , 4 , 5 ]
- BGF cited holding-company restrictions under the Fair Trade Act as the reason external funding was not possible under the previous structure. [ 1 , 4 , 5 ]
- BGF said the restructuring is intended to raise management efficiency and speed up decisions in the semiconductor materials business. [ 1 , 3 , 4 , 5 ]
Still unclear
- The purchase price of the KNW stake and the expected completion date of the transaction. No document states a value for the share purchase or a closing date; the reports give only the share count and stake percentage.
- The share of anhydrous hydrofluoric acid supply previously met by imports. Seoul Economic Daily alone reports a 97 percent dependence on imports from a specific country; the other documents do not quantify it or name the country.
What local media are saying
Timeline, local time
- ZDNet Korea publishes its report on the BGF governance reorganisation and KNW stake purchase. [ 1 ]
- Newsis publishes a report headlined on BGF acquiring the full KNW stake to simplify governance and take charge of semiconductor materials. [ 2 ]
- Dong-A Ilbo reports the KNW stake purchase and the three-pillar structure. [ 3 ]
- Yonhap publishes a comprehensive report citing the Financial Supervisory Service electronic disclosure system. [ 4 ]
- Seoul Economic Daily reports the restructuring and adds detail on anhydrous hydrofluoric acid and its import dependence. [ 5 ]