Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

SK E&S Makes a Tender Offer For Busan City Gas To Take It Private

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Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<p>This morning, SK E&amp;S, the major shareholder of Busan City Gas, announced that it would conduct a tender offer to all remaining outstanding shares of Busan City Gas (2,595,597 shares, 23.60%). The tender offer price is 85,000 won per share, and the purchase period is from today to the 15th of the next month. SK E&amp;S plans to apply for delisting of Busan City Gas.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/029/original/3.png?1631755933" class="editor-image img-responsive" data-smartkarma-image-id="230029"></figure></section><p>The total number of issued shares of Busan City Gas is 11,000,000. SK E&amp;S, the largest shareholder, owns 67.23%. And the number of treasury shares is 999,000 (9.08%). Therefore, the total remaining shares are 2,595,597 (23.60%), and SK E&amp;S plans to purchase all of these shares through a tender offer.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Shareholding"}'>Shareholding</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shares"}'>Shares</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"%"}'>%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shares"}'>Total shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-6]C[-1]">11,000,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2">100.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK E&amp;S"}'>SK E&amp;S</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7405403}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>7,405,403</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6732184545454546}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2">67.32%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":999000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>999,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.09081818181818181}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2">9.08%</td>
</tr>
<tr><td colspan="3"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP"}'><strong>ESOP</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1075}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>1,075</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.00009772727272727273}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2"><strong>0.01%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KISWIRE"}'><strong>KISWIRE</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1266279}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>1,266,279</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.11511627272727273}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2"><strong>11.51%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Other minority shareholders"}'><strong>Other minority shareholders</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1328243}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-5]C[0]-sum(R[-4]C[0]:R[-1]C[0])"><strong>1,328,243</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.12074936363636364}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2"><strong>12.07%</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: FnGuide &amp; KRX FIND"}'>Source: FnGuide &amp; KRX FIND</td></tr>
</tbody>
</table><p>From today to the 15th of next month is the tendering period, and SK E&amp;S pays cash. The cash payment date is October 20th. The tendering price is 85,000 won, a whopping 37.54% premium from yesterday's closing price. This is a premium of over 40% compared to the average price for the past 1 month and 3 months.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Pricing"}'>Pricing</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering price"}'>Offering price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":85000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'>₩85,000</td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Last close"}'>Last close</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":61800}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'>₩61,800</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Premium"}'><strong>- Premium</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.37540453074433655}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R2C2-R[-1]C[0])/R[-1]C[0]"><strong>37.54%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1W average"}'>1W average</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":61300}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula='=average(index(googlefinance(R[-2]C[1], "price", today()-5, today()), 0, 2))'>₩61,300</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Premium"}'><strong>- Premium</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3866231647634584}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R2C2-R[-1]C[0])/R[-1]C[0]"><strong>38.66%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1M average"}'>1M average</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":59659.09090909091}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula='=average(index(googlefinance(R[-4]C[1], "price", today()-30, today()), 0, 2))'>₩59,659</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Premium"}'><strong>- Premium</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.4247619047619047}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R2C2-R[-1]C[0])/R[-1]C[0]"><strong>42.48%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"3M average"}'>3M average</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":60069.354838709674}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula='=average(index(googlefinance(R[-6]C[1], "price", today()-90, today()), 0, 2))'>₩60,069</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Premium"}'><strong>- Premium</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.4150310125392692}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R2C2-R[-1]C[0])/R[-1]C[0]"><strong>41.50%</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART &amp; KRX"}'>Source: DART &amp; KRX</td></tr>
</tbody>
</table><div class="content-highlight"><p><strong>SK E&amp;S plans to pursue delisting after acquiring shares through a tender offer. According to the stock market listing regulations, if the largest shareholder owns more than 95% of the total issued stock of a target company, they can apply for voluntary delisting.</strong></p></div>

This morning, SK E&amp;S, the major shareholder of Busan City Gas, announced that it would conduct a tender offer to all remaining outstanding shares of Busan City Gas (2,595,597 shares, 23.60%). The tender offer price is 85,000 won per share, and the purchase period is from today to the 15th of the next month. SK E&amp;S plans to apply for delisting of Busan City Gas.The total number of issued shares of Busan City Gas is 11,000,000. SK E&amp;S, the largest shareholder, owns 67.23%. And the number of treasury shares is 999,000 (9.08%). Therefore, the total remaining shares are 2,595,597 (23.60%), and SK E&amp;S plans to purchase all of these shares through a tender offer.







Shareholding
Shares
%


Total shares
11,000,000
100.00%


SK E&amp;S
7,405,403
67.32%


Treasury shares
999,000
9.08%



ESOP
1,075
0.01%


KISWIRE
1,266,279
11.51%


Other minority shareholders
1,328,243
12.07%

Source: FnGuide &amp; KRX FIND

From today to the 15th of next month is the tendering period, and SK E&amp;S pays cash. The cash payment date is October 20th. The tendering price is 85,000 won, a whopping 37.54% premium from yesterday's closing price. This is a premium of over 40% compared to the average price for the past 1 month and 3 months.





Pricing

Offering price
₩85,000



Last close
₩61,800


- Premium
37.54%


1W average
₩61,300


- Premium
38.66%


1M average
₩59,659


- Premium
42.48%


3M average
₩60,069


- Premium
41.50%

Source: DART &amp; KRX

SK E&amp;S plans to pursue delisting after acquiring shares through a tender offer. According to the stock market listing regulations, if the largest shareholder owns more than 95% of the total issued stock of a target company, they can apply for voluntary delisting.

Busan City Gas Tender Offer at a Whopping 40% Premium by SK E&S: