SK President Cho Dae-shik taps the gravel to announce the approval of a proposal of merging SK and SK C&C at the first extraordinary general meeting of shareholders at the SK Group headquarters in downtown Seoul on June 26.(Photo:SK Group)
SK Group went ahead with a plan to merge SK and SK C&C, giving birth to a company with 13.5 trillion won in assets to be run as a holding company as of Aug. 1, despite the opposition by National Pension Service, a shareholder, against the merger, the group said recently.
SK Group secured enough friendly shares to overcome opposition by NPS, who said the move may hurt the price of the companies’ shares.
SK Group secured a successful outcome for its move. The group held an emergency shareholders meeting on June 26 to take care of the merger proposal, with 87 percent approving of the merger; 81.5 percent of shareholders with voting rights were present at the meeting.
The company from the merger will focus on five major areas of its operation: IT service; ICT fusion; Bio pharmaceutical semiconductor material; module; and LNG value chain. The goal is to develop them further so its total annual sales reach 200 trillion by 2020, with a 10 trillion won profit before tax, officials of the group said.
The merger is expected to prepare the group’s management system before Chairman Chey Tae-won’s return to office following his release from prison, and at the same time set up a base to lead new growth areas to generate profits as much as they can. Although merged, the two companies operate separately under their own CEOs.
Following the shareholders’ meeting, President Cho Dae-shik said, “we respect NPS’ opposition to the deal with respect, and we will do our best to boost the value of the company’s shares to defray the concern expressed by NPS on the merger.”
NPS skipped the shareholders’ meeting and no shareholders present at the meeting expressed opinions on the upcoming merger during the 12 minutes that the meeting lasted. SK C&C also held a shareholder meeting at its office in Bundang, Gyeonggi Province, with holders of 87.2 percent of the outstanding shares present at the meeting and 90.8 percent of those shares represented approving of the merger. SK and SK C&C will merge in the ratio of 1 to 0.74 with SK C&C to issue new shares to exchange its shares with those of SK, with the merger taking the form of SK taking over SK C&C.
President Park Jung-ho of SK C&C told reporters covering the shareholder meeting that the merger will be a model case as it is designed to improve the management system reform getting approval from every party concerned. The two companies will be run separately even after the merger, with each retaining its own CEO and their offices at their current locations, SK in Seoul and SK C&C in Bundang.
Financial investment sources said the merger has been concluded as expected in the financial community, and those companies would see the prices of their shares jump significantly because their operations have a great chance to bring synergy.
A stock analyst said the holding company born out of the merger would have the capacity to make quick decisions, with the bio and LNG areas of its operation expected to do well in the future. The prices of their shares have been projected to jump to 400,000 won per share.
The sources at the financial market speculate SK might retire some of its shares or boost the dividends. Another stock analyst things SK will buy back some of its shares to make up for losses incurred on the part of its shareholders in the process of the merger.
The minor shareholders can ask the company to buy their shares from June 26 and July 26 if the share prices are lower than before the merger, 171,853 won per share for SK and 230,940 won per share for SK C&C. The company declared that if the price tag for a share buyback exceeds 1 trillion won, they could cancel the merger.
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