KOLON GLOBAL announced on the 1st that it will merge with the golf, resort, and hotel specialized company "MOD" (MOD) and the asset management specialized company "KOLON LSI" (LSI).
KOLON GLOBAL noted that this merger is a strategic decision aimed at securing a sustainable growth foundation through ▲ diversification of the business portfolio ▲ expansion of the value chain ▲ improvement of the financial structure.
MOD, which is merging with KOLON GLOBAL, is a corporation engaged in hotel, resort, and golf course businesses. It owns or operates the Mauna Ocean Resort and golf course in the Mauna Ocean tourist complex located in Gyeongju, and the Cappuccino Hotel located in Gangnam-gu, Seoul.
LSI is a comprehensive service corporation for real estate consignment operation and building maintenance, operating the Gyeongju KOLON Hotel, Garden Golf Course, and rest areas. It also provides building maintenance services such as defect repair for buildings including the Poco Hotel in Seongdong-gu, Seoul, and food and beverage (F&B) catering services.
With a large stake in construction, KOLON GLOBAL plans to build a broad business portfolio by incorporating the operational capabilities of hotels, resorts, and golf courses held by MOD and LSI, transitioning from its existing focus on development and construction. This will create stable cash flow and prepare for the volatility of the construction market.
KOLON GLOBAL, a leader in domestic onshore wind power generation, is expected to transform into a comprehensive energy corporation equipped with operational capabilities beyond just the development and construction of wind power.
In environmental businesses such as water treatment and waste management, it is expected to maximize stability and efficiency through integrated capabilities and total service provision. KOLON GLOBAL plans to leap forward as a "total provider" in real estate, environment, and energy while expanding its value chain, which flows from development to construction and operation.
Upon completion of the merger, the high-quality assets held by MOD and LSI will flow into KOLON GLOBAL. During this process, the self-capital will increase, and the liability ratio of KOLON GLOBAL is expected to decrease, leading to an improvement in its financial structure.
This merger will be conducted through a method in which KOLON GLOBAL issues new shares to exchange for the existing shares of MOD and LSI. The merger ratio is 1 (KOLON GLOBAL) : 1.5 (MOD) : 0.99 (LSI).
The merger ratio was determined by an accounting firm based on Article 176-5 of the Capital Market Act, applying different evaluation criteria for listed and unlisted companies. KOLON GLOBAL explained that it calculated the merger ratio based on an asset value that is higher than its market capitalization, striving to enhance shareholder value.
As both MOD and LSI, the merged companies, generate stable revenue, they reflected the asset value and revenue value at a ratio of 1 : 1.5. After a shareholders' meeting on Aug. 12, the merger is planned to take place on Oct. 1, with the listing of new shares on Oct. 22.
A representative of KOLON GLOBAL said, "This merger is a strategic decision to overcome the volatility of the construction market and maximize synergy through stable operational businesses," adding, "We will continue sustainable growth based on a business portfolio that encompasses the life cycle of real estate assets from development to operation."