SEOUL, KOREA --- After a year long negotiation, it is safe to say that SK Telecom did in fact acquire Hynix when Ha Sung-min, President and CEO of SK Telecom signed the stake purchase agreement with Hynix Semiconductor and its creditors. To welcome Hynix as their new family member, SK Telecom signed a stock purchase agreement to buy 6.4% (42.25 million shares) of the existing shares held by the creditors, as well as a subscription agreement to acquire 14.7% (101.85 million shares) of the new shares to be issued by Hynix through a third-party allotment. The number of shares acquired is 146.10 million shares, which is around a 21.1% equity stake, and it amounts to 3.427 trillion won. The purchase price per share is KRW 24,500 (total of KRW 1.841 trillion) for the existing shares and KRW 23,000 (total of KRW 2.343 trillion) for the new shares, resulting in an average of KRW 23,454 per share in total acquirement. Considering Hynix’s market price (based on the closing price on Nov. 10th – KRW 21,500), an average control premium of around 9.1% (14.0% for existing shares and 7.0% for new shares) has been added.
SK takes wings
“We will become internationally successful with Hynix,” said Chey Tae-won, SK Group’s Chairman and CEO who could not hide his high expectations after the Hynix acquirement. As it stands now, the SK Group has knocked on the doors of the global market many times in efforts to shed their image as a domestic enterprise, but often had to face disappointing results. With their initial advance in the Mongolian market in 1999, Vietnam in 2000, the U.S. in 2005 and China in 2007, SK Telecom has tried but had to turn back after realizing the high barriers of the global markets. For SK, who has failed in achieving productive outcomes in markets outside the country, Hynix having the second-largest market share in the global memory semiconductor sector as well as a global network in some 15 countries worldwide including the U.S., Europe and China, is expected to give a great boost to SK Telecom’s overseas expansion in various wire-wireless internet platforms based on the trend of ICT fusion. Hynix is expected to act as a bridgehead for their global entrance, not only for SK Telecom but for other affiliates in the group as well,
Although SK Telecom has clung to the number one spot in the mobile communication sector, the number of subscribers is now saturated, resulting in a flat market. And with the government’s continuous rate-cut policies in telecommunications, a decline in returns is inevitable. Therefore, the SK Group has been focusing on finding a new growth engine, and now by grafting their development in platform mobile services onto Hynix’s developments in semiconductor chips, they are expected to obtain considerable strength in the mobile industry.
Ha Sung-min, President & CEO at SK Telecom stressed that, “With the acquisition of Hynix, SK Telecom will be able to maximize the corporate value by securing a new growth engine – semiconductors, along with the existing mobile communication and platform business.”
If the SK Group has secured a stable bridgehead for overseas expansion and a new growth engine with this Hynix acquisition, then Hynix is expected to derive benefits as well in financial soundness, where previously they have had trouble in equipment investment under the watch of their creditors. SK Telecom has stated that they plan to focus on enhancing the corporate value of Hynix in the mid-long term by investing the KRW 2.434 trillion obtained from the 14.7% purchase of the new shares in improving Hynix’s financial soundness and strengthening their competitiveness in the semiconductor market. And with this acquisition, employment security and human resource cultivation are expected to contribute to job creation, as well as strengthening their national competitiveness as a semiconductor powerhouse.
Regarding this acquisition, Chey Tae-won, SK Group’s Chairman said, “The Hynix acquisition is more than just some synergy effect between the acquirer and the acquired, carrying a heavy responsibility to bring success to a company in the semiconductor sector which is a key national industry,” and requested, “Although the current conditions of the semiconductor market are not so favorable, we must build a global history of success together with Hynix’s outstanding technology and SK’s strong corporate culture and thus practically contribute to the national economy.”
