Merger of SK Inc. and SK Materials Seen as 'Positive' for SK Stock Price

SK REITs (SK Entrusted Management Real Estate Investment Company) will enter the KOSPI market next month. Photo of SK Group headquarters, SK Seorin Building in Jongno-gu, on the 18th. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Junho Hwang] On the 20th, SK Inc. announced that it will merge with SK Materials, drawing attention to the stock price trend. Yuanta Securities evaluated SK's stock price positively on the 21st.

First, the value of SK Materials has been reflected in SK's market capitalization at about a 65% discount compared to the market price. Through this merger, SK will be reborn as a business holding company that operates IT and semiconductor-related materials businesses on its own, rather than just a simple holding company. It is expected to enhance the corporate value of the materials sector by creating synergy effects with its subsidiaries SK Hynix and SK Siltron.

Also, shareholders have mixed reactions to this merger, but it can be seen that SK shareholders are more welcoming. Accordingly, when the market opens on the 23rd, SK's stock price is expected to show strength.

Additionally, the merger ratio between the two companies was decided as SK to SK Materials at 1 to 1.58, which is almost the same as the closing price ratio on the 20th of 1 to 1.60. Assuming the merger will not fail, the stock prices of both companies are expected to be determined according to the merger ratio.

However, if the stock prices of the two companies move differently from the merger ratio, a risk-free arbitrage opportunity will arise. Due to this risk-free arbitrage opportunity, the actual stock price movement is unlikely to deviate significantly from the merger ratio. Therefore, if SK's stock price rises strongly on the 23rd, SK Materials' stock price is also expected to show an upward trend.

Of course, if the possibility of the merger failing becomes high, the stock price movements of both companies are expected to diverge from the merger ratio. In this case, SK shareholders can wait without any worries for the rebirth as a materials company. However, SK Materials shareholders will need to respond differently depending on the possibility of the merger failing.

If more than about 18% of the total shares of SK Materials (1.92 million shares, worth 800 billion KRW) exercise their stock purchase rights in this merger case, the merger will be canceled. The stock purchase right price is 415,751 KRW, slightly higher than the closing price on August 20th (414,900 KRW).

Namgon Choi, a researcher at Yuanta Securities, advised, "SK Materials shareholders should refrain from selling and respond while observing the flow."

This content was produced with the assistance of AI translation services.