Doosan rises more than 6% early on the 24th. The stock appears to be gaining on analysis that concerns over financial burdens eased after the company decided to monetize its equity in subsidiary Doosan Robotics to raise funds for acquiring SK Siltron.
As of 9:20 a.m. on the day, Doosan was trading at 827,000 won, up 47,000 won (6.03%) from the previous session on the Korea Exchange.
Earlier, Doosan disclosed that it signed a price return swap (PRS) contract backed by 11.7 million shares of Doosan Robotics as collateral and will raise a total of 947.7 billion won. A PRS is a derivatives contract under which the difference is paid if the price at settlement is below the reference price, and the profit is allocated if it is higher. With this contract, Doosan's equity stake in Doosan Robotics will fall from 68% to 50.06%.
Doosan said the purpose of the raised funds is "securing resources for mergers and acquisitions (M&A) investments and improving the financial structure." The market sees a high likelihood the funds will effectively be used for the SK Siltron acquisition. SK Siltron ranks third in global wafer market share, and Doosan is fostering semiconductors as a new core growth pillar for the group, following its existing energy and machinery businesses.
Earlier, on the 17th, Doosan was selected as the preferred bidder to acquire 70.6% equity in SK Siltron held by SK. The market values SK Siltron at more than 5 trillion won, and the value of the equity subject to this acquisition is estimated at 3 trillion to 4 trillion won.
Brokerages analyzed that Doosan's decision will resolve uncertainty over funding for the SK Siltron acquisition.
Kim Su-hyeon, an analyst at DS Investment & Securities, said, "If we add the newly raised funds to Doosan's existing cash and cash equivalents of 1.27 trillion won, available funds are estimated at more than 2.16 trillion won," and "the funds are highly likely to be used to acquire 70.6% equity with management control in SK Siltron going forward."
The analyst added, "This funding is expected to completely dispel concerns related to fundraising, such as using treasury shares or a rights offering, which have been raised so far."
Concerns remain about SK Siltron's short-term results, but some expect a recovery to begin in the fourth quarter.
Lee Ju-hyeong, an analyst at Eugene Investment & Securities, said, "Year-to-date (YTD) results at SK Siltron show profitability significantly weaker than last year, but from the fourth quarter, we expect improving results on easing customer inventory adjustments, price stabilization and expense savings."