SK Innovation Co., the energy solution unit of South Korean large conglomerate SK Group, has agreed to buy Dow Chemical Co.’s ethylene acrylic acid (EAA) business through its affiliate at $370 million, a move that is expected to allow the Korean company to leap forward to become a leading EAA supplier in the global market.

The firm said in a regulatory filing on Thursday that its affiliate SK Global Chemical Co. will take over Dow Chemical’s EAA business at $370 million to venture into the high-value added EAA industry in an attempt to diversify its business portfolio. The firm will assume Dow Chemical’s EAA production facilities in the U.S. and Spain, as well as related technology and intellectual property under the deal.

EAA, adhesive resin, is widely used as an adhesive for wrapping aluminum foil and polyolefins. Dow Chemical’s PRIMACOR Copolymers are well known EAA brand.

Only a handful of global chemical firms such as Dow Chemical and DuPont Co. have been able to produce the material due to a high technological barrier to producing it. Most of its demand has come from advanced markets such as the U.S. and Europe.

Dow Chemical has commanded the global EAA market with a lion’s share, but decided to divest its copolymers unit to gain antitrust approval for its $59 billion merger with U.S. chemical rival DuPont.

Through latest acquisition, SK Innovation is expected to become the dominant player in the global EAA market. The Korean chemical firm also expects the addition of the EAA business to create synergies with its other chemical businesses, helping it diversify its high-value added chemical products. It aims to cater to EAA demand in emerging markets including China on top of existing demand in advanced markets.

SK Innovation said earlier this year that it would invest up to 3 trillion won ($2.61 billion) in its chemical and electric vehicle battery businesses throughout this year to accelerate its global growth.

Shares of SK Innovation closed Thursday at 161,000 won, up 1.58 percent from the previous session in Seoul trading.

By Jung Wook

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