Recent Works
Merger and Business Combination of HD Hyundai Chemical and Lotte Chemical's Daesan Plant
Bae, Kim & Lee LLC ("BKL") advised on the petrochemical business restructuring M&A transaction in which Lotte Chemical spun off its Daesan plant to establish Lotte Daesan Petrochemical, which was then absorbed and merged into HD Hyundai Chemical, with Lotte Chemical acquiring additional shares in HD Hyundai Chemical (the surviving entity) so that HD Hyundai Oilbank and Lotte Chemical would jointly control the combined entity on a 50:50 basis. The transaction received conditional approval from the Fair Trade Commission on August 20, 2026, and the merger was completed on September 1, 2026, launching the combined entity that will integrally operate the Naphtha Cracking Centers (NCC) and production facilities of both companies in the Daesan Industrial Complex.
This transaction represents the first deal under the government-led petrochemical business restructuring initiative aimed at addressing oversupply in the domestic petrochemical industry. It combined Lotte Chemical's Daesan NCC business into HD Hyundai Chemical—originally established in 2014 as a joint venture between HD Hyundai Oilbank (60%) and Lotte Chemical (40%)—and transitioned the ownership into an equal joint-control structure. As the first transaction completed within the petrochemical restructuring effort, it garnered significant attention as its structure and regulatory outcomes are expected to serve as a benchmark for subsequent restructuring projects, such as those in Yeosu.
The deal involved a complex structure combining a spin-off, an absorption merger, and an additional share acquisition in stages to reshape an existing joint venture into an equal joint-control partnership. It was a highly sophisticated transaction featuring interconnected and complex issues, including designing the governance and shareholder rights and obligations of the combined entity, transferring assets, contracts, and workforce through the spin-off and merger, considering partner companies and local economic impacts, and aligning the merger control review schedule with the transaction timeline.
Regarding the merger control review, 20 petrochemical products ranging from basic petrochemicals to downstream products and 3 refined oil products were subject to review. A major issue arose from the reduction of market players from 4 to 3 in the domestic LDPE and EVA markets where both companies operate. Utilizing the merger remedies submission procedure, BKL proactively advised the parties to design and submit remedies that addressed competition concerns. As a result, BKL successfully secured approval subject only to behavioral remedies—such as price increase caps for domestic markets, obligations to maintain supply across all grades, prohibitions on exchanging competitively sensitive information, and restrictions on concurrent executive service—without requiring structural remedies such as asset divestitures.
As legal counsel, BKL provided comprehensive legal advice across the entire transaction, including designing the transaction structure, conducting legal due diligence, drafting and negotiating transaction documents (such as spin-off/merger agreements and shareholders' agreements), and managing the entire merger review process—from voluntary pre-notification and formal filing to economic analysis, preliminary hearings, and full commission hearings—as well as supporting the transaction closing. Furthermore, BKL continues to provide post-closing advice, including formulating remedy compliance plans, establishing information-sharing compliance frameworks between the combined entity and shareholder companies, and developing win-win cooperation measures for partner suppliers. By organically combining M&A advisory services with regulatory merger review responses to complete this landmark business restructuring, BKL has once again demonstrated its comprehensive advisory capabilities in large-scale industrial restructuring through seamless collaboration between its M&A and antitrust experts.
Related Professionals: Hyunchul An Partner, Jong Seung Park Partner, Seongun Yun Partner, Hyuna Kim Partner, Junyeun Cho Partner
