Dongguk CM Signs Definitive M&A Agreement with Ajou Steel... Secures 60% Stake for 119.4 Billion KRW

At the signing ceremony for the stock purchase agreement and new share subscription agreement between Dongguk CM and Aju Steel, Hyun-sik Lee, Sales Director of Dongguk CM (left), and Young-se Lee, Head of Business Strategy Division at Aju Steel (right), are taking a commemorative photo. Photo by Dongguk Steel.

Dongkuk Steel Group's cold-rolled galvanized and color steel plate specialist Dongkuk CM announced on the 8th that it has signed a stock purchase agreement and a new share subscription agreement with Ajou Steel.

On the morning of the 8th, Dongkuk CM and Ajou Steel each passed the contract approval through their respective board meetings, and then held the 'Dongkuk CM-Ajou Steel Stock Purchase Agreement and New Share Subscription Agreement Signing Ceremony' at Samil Accounting Corporation located in Yongsan-gu, Seoul, where representatives from both companies attended and finalized the mutually agreed contract.

This comes about three months after the basic agreement in August. Through this contract, Dongkuk CM will acquire 42.4% of the shares held by the largest shareholder and others for 62.4 billion KRW, and acquire 11.36 million new shares through a third-party paid-in capital increase for 57 billion KRW, securing a total of 59.7% stake in Ajou Steel for 119.4 billion KRW.

Dongkuk CM secured a shareholding ratio approximately 3 percentage points higher than the previous 56.6% at a price 9.1 billion KRW lower than the 128.5 billion KRW for the old and new shares agreed upon in the basic contract. This indicates that Dongkuk CM adjusted the purchase price for the old shares during the negotiation process.

Following the signing of the SPA and SSA, Dongkuk CM plans to complete the acquisition within the year and focus on post-merger integration (PMI). Lee Hyun-sik, Sales Director of Dongkuk CM, will lead the PMI task force and initiate projects in areas such as strategy, sales, production, procurement, and human resources with goals of ▲management stabilization ▲financial stabilization ▲capability enhancement.

Dongkuk CM judged that a strategic alternative is necessary for sustained growth amid the slowdown in the domestic color steel plate market and is seeking to establish a foundation for economies of scale through the acquisition of Ajou Steel in August, combining with a peer in the industry and aiming to strengthen synergies in core businesses.

Through this merger, Dongkuk CM expects synergy effects such as ▲reduction of production costs ▲strengthening purchasing power through integrated procurement of raw and subsidiary materials ▲financial stabilization by utilizing available funds ▲expansion of export opportunities.

This M&A was meticulously managed from discovery to signing by Jang Sun-ik, Executive Director and Head of Purchasing at Dongkuk Steel. Based on his experience in strategy and production, Director Jang supported due diligence and plans to leverage his specialized strengths in procurement during the upcoming PMI to explore synergies with Ajou Steel. Once the Dongkuk CM-Ajou Steel corporate merger review is completed, Ajou Steel will be incorporated as a subsidiary of Dongkuk CM.

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