Splitting Companies, Stock Prices Diverge in Joy and Sorrow

POSCO, 11%↑ Rebound Success
CJ ENM Falls to 140,000 Won Range

[Asia Economy Reporter Song Hwajeong] Is corporate spin-off a boon or a bane for stock prices? The stock prices of POSCO and CJ ENM, which recently announced corporate spin-offs, showed contrasting fortunes.

According to the Korea Exchange on the 9th, POSCO's stock price has risen more than 11% this month. It has risen for six consecutive trading days until the previous day, approaching the 300,000 KRW mark. POSCO, which showed weakness throughout last month due to concerns about the industry, breaking below the 300,000 KRW level, succeeded in rebounding thanks to the news of its transition to a holding company.

POSCO is known to proceed with the transition to a holding company by splitting into an operating company engaged in the steel business and an investment-focused holding company, placing the POSCO operating company and major affiliates as subsidiaries under the holding company. The specific method of the split has not been disclosed, leading to divided opinions between a physical split and a spin-off. Byun Jongman, a researcher at NH Investment & Securities, predicted, "POSCO's transition to a holding company will likely be a physical split method, where the holding company, owning 100% of the operating company's shares, is listed, and the operating company remains unlisted." This is because the spin-off method, where both the holding company and the operating company are listed, requires the holding company to secure 30% of the operating company's shares (holding 13.3% treasury stock), which is a significant burden.

On the other hand, Bang Minjin, a researcher at Eugene Investment & Securities, said, "Since POSCO's EBITDA this year is expected to reach 13 trillion KRW, the background for pursuing the holding company transition seems to reflect the intention that new growth businesses such as secondary battery materials and hydrogen should be evaluated separately from the core steel business," emphasizing the spin-off method.

In contrast, CJ ENM's stock price fell sharply due to the spin-off issue. The stock price, which was in the 170,000 KRW range a month ago, dropped to the 140,000 KRW range. Although signs of a rebound have appeared this month, it is still insufficient to recover the decline. Earlier, CJ ENM announced plans last month to establish a new company through a physical split of the main production functions of entertainment, drama, film, and animation businesses. Shin Eunjeong, a researcher at DB Financial Investment, said, "Since only the production functions are expected to be split and the media business itself is not disappearing, and the newly established company through the split will not be immediately listed in the short term, there is no reason for the stock price to fall right now as it does not damage CJ ENM's corporate value."

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