HD Hyundai Construction Equipment and HD Hyundai Infracore announced a merger, leading to an increase in stock prices in the pre-market (8 a.m. to 8:50 a.m.) on the 2nd.
HD Hyundai Construction Equipment shares traded at 80,000 won on Nextrade at 8:36 a.m. on the 2nd. The stock price increased by 5.96% (4,500 won) compared to the previous day's closing price. At the same time, HD Hyundai Infracore's shares rose by 3.6% (450 won) to 12,950 won.
HD Hyundai Construction Equipment and HD Hyundai Infracore held a board meeting the previous day and approved the merger plan. They presented a blueprint to restart as HD Construction Equipment (provisional name), optimize their product lineup, and specialize production regionally.
The merger will proceed by issuing new shares of the surviving company, HD Hyundai Construction Equipment, to shareholders of HD Hyundai Infracore. According to the merger ratio, 0.1621707 shares of HD Hyundai Construction Equipment will be allocated for each common share of HD Hyundai Infracore. The record date for shareholders is set for the 16th.
Securities firms positively assessed the merger, as it can achieve economies of scale. Choi Kwang-sik, a researcher at DAOL Investment & Securities, said, "In terms of accelerating the synergies and economies of scale we have been pursuing, I believe this will serve as a driving force for an increase in the combined market capitalization of both companies," and noted, "As the exercise of stock purchase claims will be possible until September 15, it can be interpreted as a point where we are confident in recovery in the business environment and performance."
Shareholders opposing the merger can exercise their stock purchase claim to demand the company buy back their shares. The exercise price for the stock purchase claim is set at 75,545 won for HD Hyundai Construction Equipment and 11,885 won for HD Hyundai Infracore. If the claims for stock purchases for HD Hyundai Construction Equipment and HD Hyundai Infracore exceed 150 billion won and 250 billion won, respectively, re-approval from the board will be necessary.