Hanil Cement, a cement manufacturing and sales company, has decided to absorb its subsidiary Hanil Hyundai Cement, and this led to a surge in stock prices in the after-market on the 17th. This is interpreted as a response from investors who expect an improvement in corporate value following the integration of the two companies.
Hanil Cement shares traded at 22,250 won on the Nextrade at 4:48 p.m. on the 17th, up 17.72% (3,350 won) from the previous day's closing price. The stock price of Hanil Cement fluctuated between 18,630 won and 19,080 won during regular trading that day, but broke the 20,000 won mark for the first time in over three years following the merger news.
Hanil Cement announced its plans for the absorption merger with Hanil Hyundai Cement after the regular trading hours that day. Both Hanil Cement and Hanil Hyundai Cement engage in the manufacturing and sales of cement, and they stated that they aim to achieve economies of scale and management efficiency through the merger.
Currently, Hanil Holdings is the largest shareholder, holding a 63.5% stake in Hanil Cement. Hanil Cement holds a 77.8% stake in Hanil Hyundai Cement. Once the merger is completed, Hanil Holdings is expected to hold a 59.8% stake in Hanil Cement.
The merger ratio between Hanil Cement and Hanil Hyundai Cement has been set at 1 to 1.0028211. Common stockholders of Hanil Hyundai Cement will receive 1.0028211 shares of common stock in Hanil Cement for each share they hold. No new shares will be allocated for common stock of Hanil Hyundai Cement that Hanil Cement holds.
The merger date is scheduled for Nov. 1. The new shares of the merged Hanil Cement are expected to be listed on the 21st of the same month.
Hanil Cement said, "After the merger is completed, there will be a complementary effect in terms of profitability, growth, and stability," and noted, "We expect to create synergy effects by mobilizing resources for future environmentally friendly investments." It added, "The increase in corporate value is expected to lead to positive results in terms of returning value to shareholders, enhancing shareholder value."