DL Chemical Co. is exploring a sale of Cariflex Pte, the Singapore-based synthetic rubber manufacturer it acquired five years ago for $530 million, as South Korea’s largest petrochemical company grapples with mounting debt pressures.
The Korean company has engaged multiple domestic and international investment banks to select a lead advisor for the potential divestment, according to industry sources. Analysts estimate Cariflex could be valued at more than 1 trillion won ($721 million), despite the broader turmoil plaguing Korea’s chemical sector.
The timing appears strategically motivated. DL Chemical’s debt-to-equity ratio has surged to approximately 350% this year, well above comfortable levels for most industrial companies. A successful Cariflex sale would provide much-needed cash to reduce leverage at a time when Korean petrochemical firms are facing severe margin compression from Chinese oversupply.
Cariflex has emerged as one of DL Chemical’s few bright spots since the 2020 acquisition from Kraton Corp. The unit, which produces specialty latex for medical gloves and surgical equipment, has maintained operating margins near 20% while controlling roughly 75% of the global isoprene rubber latex market.
However, the sale comes as Korea’s chemical industry confronts an existential crisis. Major competitors including LG Chem and Lotte Chemical posted significant losses in 2024, with industry observers warning that aggressive Chinese capacity expansion has created structural oversupply that could persist for years.
A Boston Consulting Group study commissioned by Korea’s chemical industry association recently concluded that nearly half of domestic petrochemical firms could face collapse within three years if current conditions persist. The Korean government has urged widespread restructuring to prevent deeper industry losses.
The potential Cariflex divestment represents a reversal of DL Chemical’s previous expansion strategy. The company completed a roughly 2 trillion won takeover of Cariflex’s former parent Kraton in 2021, one of Korea’s largest cross-border chemical acquisitions at the time.
Yet executives now appear to view specialty latex as too niche to support DL Chemical’s broader ambitions of becoming a top-20 global chemicals company. The move also comes after DL Chemical invested $355 million to open the world’s largest polyisoprene latex plant in Singapore just last year.
