LS Cable & System canceled its plan to purchase additional equity in Gaon Cable, resulting in a sharp drop in Gaon Cable's stock price on the 12th.
The stock closed at 67,400 won in the KOSPI market. The stock price fell by 6.39% (4,600 won) compared to the previous day. In the after-market (after 3:40 p.m.) at 4:50 p.m., it fell further to 63,000 won. The decline rate is about 12.5% compared to the previous day's closing price.
This is the effect of LS Cable & System withdrawing its previously announced equity purchase plan under the internal trading pre-disclosure system for listed companies.
LS Cable & System announced its plan to purchase approximately 70 billion won worth of Gaon Cable shares in the market last April. The plan was to buy 1,419,878 shares (8.6% stake) at 49,300 won per share. The purchase was scheduled to take place from the 20th of last month to the 20th of this month.
Starting the day after the announcement, Gaon Cable's stock price surged. The expectation of a 'sold-out' stock stimulated investor sentiment. This was because if LS Cable & System purchased additional equity while already holding 81.63% of Gaon Cable's shares, it would rise to the 90% range. The number of circulating shares would decrease accordingly.
Moreover, as the 'tariff war' that was escalating began to calm down, Gaon Cable's stock price soared to 83,800 won on the 22nd of last month, marking the highest price since its listing in 1987.
However, the excessively high stock price actually led to the withdrawal of the equity purchase plan. LS Cable & System did not purchase a single share of Gaon Cable before the withdrawal.
According to the internal trading pre-disclosure system for listed companies, 'if the stock price deviates from the closing price of the day before the transaction plan report by 30% or more, or if market conditions change rapidly, the transaction plan can be withdrawn.'