In today’s briefing:
- Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”
- SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio
- Sanil Electric IPO Book Building Results Analysis
Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”
- Korea’s majority party plans to amend the Capital Markets Act to base listed companies’ merger ratios on intrinsic rather than market value, dubbed the “Doosan Bobcat Prevention Law.”
- Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
- We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment’s enforcement.
SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio
- The merger ratio, not as unfavorable to SK Innovation as feared, shows SK Group acting cautiously amid political and regulatory scrutiny.
- SK Inc.’s stake will drop to mid-60s; the 1.2x merger ratio for SK E&S could positively affect SK Innovation’s stock price short-term.
- Persuading KKR is crucial. SK E&S won’t convert ₩3T in RCPS or grant appraisal rights, potentially leading KKR to consider litigation, a significant risk to the merger.
Sanil Electric IPO Book Building Results Analysis
- Sanil Electric reported excellent IPO book building results. The IPO price has been determined at 35,000 won, which is 16.7% higher than the high end of the IPO price range.
- The demand ratio from 2,205 institutional investors was 414 to 1. Sanil Electric (062040 KS) IPO will start trading on 29 July 2024.
- Our base case valuation of Sanil Electric is market cap of 1.8 trillion won or target price of 58,593 won (67% higher than the IPO price of 35,000 won).
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