Shares of APACT plunged after word spread that UNID, a chemical company under the OCI group, would sell semiconductor back-end corporations APACT, which it holds through a special purpose company (SPC). Because the per-share sale price was lower than the market price, controversy arose in the market that the largest shareholder sold the company at a bargain price.
However, some said the sell-off was excessive because the sale price was not a figure derived from reflecting the corporations' value. APACT's largest shareholder was a private equity fund, and the sale price was set under prearranged criteria during liquidation tied to the fund's maturity.
Industry watchers instead expect the company's profit to increase on the back of a semiconductor boom even if the largest shareholder changes. APACT, which swung to a profit last year, expects its results to improve as orders from clients rise during the semiconductor upcycle.
APACT said the largest shareholder will change after Mutual Growth transferred its 55.33% equity to Dynamic Growth at 5,249 won per share. The transaction was carried out by UNID, which set up an SPC called Mutual Growth, exercising a right of first purchase proposal and designating Dynamic Growth, a management consulting firm established in Feb., as the buyer.
What caused the issue was the per-share sale price specified in the contract. The 5,249 won per share at which the largest shareholder transferred equity was far below the closing price of 7,220 won on the 6th, when the sale contract was signed. Typically, when a largest shareholder sells equity, a control premium is reflected and the sale price is set above the market price.
But once the news broke that APACT's largest shareholder would sell equity below the market price, a wave of dumping hit the market. On the 7th, APACT's share price fell 12.6%, dropping to the lowest level this year.
Industry insiders said the stock overreacted given that this change of the largest shareholder differs structurally from a typical sale.
The sale price was set based on Nov. 17 of last year, the date marking 3 years and 1 month from the establishment of the Aurora Win-Win Growth Project Fund No. 2 created by UNID to acquire APACT, by adding a 20% control premium to the weighted average share price over the prior three months.
The company said, "It is a price calculated under the conditions of UNID, the strategic investor (SI) and liquidity provider (LP) specified in the fund's articles, exercising the right of first purchase proposal." An industry official also noted, "The former largest shareholder, a private equity fund, exercised a right of first refusal to recover capital, which is different from a typical control sale," adding, "Because the sale price was determined under already set conditions, it is hard to say this sale undervalued the corporations."
Dynamic Growth, the new largest shareholder, is also likely an SPC. UNID, however, remains cautious about disclosing specific contract details.
Aurora Partners began the process of selling APACT last year as the fund reached maturity. Although a change in control is planned, APACT's core business is expected to grow. After acquiring the packaging business unit of AT Semicon's Jincheon plant in 2022, APACT expanded its business model—previously concentrated on semiconductor testing—into an integrated test-and-packaging service, and turned to a profit last year.
Moreover, with a severe shortage in memory supply, back-end companies' results are expected to improve. Mirae Asset Securities said, "As the processes of a key client (SK hynix) rapidly shift toward high bandwidth memory (HBM), outsourced back-end volumes for commodity DRAM and NAND will increase," adding, "APACT is expected to benefit."
The company said, "While orders from existing major clients are increasing, we additionally won orders for DDR5 commodity products from Samsung Electronics, which mainly awarded NAND packaging, and order volumes from small and midsize fabless companies are steadily rising, so we expect sales to grow significantly this year."