| | | Meanwhile, SK is continuing its plan to make Hynix vertically integrated. They are paying about $900m for a wafer company that made about $6m in net profit last year even as the wafer business has booming lately, with shortages and rising prices.
Completion of Vertical Integration
SK to Finalize LG Siltron Acquisition Soon to Add Wafer Business
As the SK Group is about to finalize the acquisition deal of silicon wafer producer LG Siltron, a synergy with SK Hynix in the semiconductor sector is expected.
SEOUL,KOREA
August 2017 - 12:15pm
Cho Jin-young
As the SK Group is about to finalize the acquisition deal of silicon wafer producer LG Siltron, SK Hynix will get the wings and fly soon.
SK needs to receive approval of the acquisition of LG Siltron in six countries – South Korea, Singapore, Japan, Europe, China and the United States – in order to close the deal of LG Siltron. However, the Chinese government has postponed giving the approval so far.
According to investment banking (IB) industry sources on August 3, creditors, including Woori Bank, and interested parties, like Samil PricewaterhouseCoopers, the lead manager for the sale of LG Siltron, initially aimed to receive approval of the acquisition of LG Siltron by the SK group in the countries by the end of July but obtained the approval early August. Accordingly, SK is seeking to close the deal in the third quarter.
SK will be able to finalize the deal when it proves to the countries that the acquisition of LG Siltron will not restrain competition. With approval, the sale of LG Siltron will be concluded soon. SK will also be able to change the name of LG Siltron and strengthen the control of the company.
IB industry watchers believe that the Chinese government belatedly gave approval of the corporate combination due to its retaliation measures over the deployment of the THAAD system and the Chinese manmandi (slowly) attitude.
An official from the IB industry said, “With the approval, the SK Group has almost completed the vertical integration with SK Hynix. We have come a step closer to Chairman Chey Tae-won’s plan to complete the fourth industrial revolution through semiconductor.”
On January 23, LG Corporation, the holding company of the LG Group, agreed to sell its 51 percent stake, 34.18 million shares, in LG Siltron to SK Holdings for 620 billion won (US$549.4 million) and SK has sought to receive approval of the corporate combination. SK also agreed to buy the remaining 49 percent stake in the company – a 19.7 percent stake owned by the KTB PE consortium and a 29.39 percent stake owned by creditors – for 400 billion won (US$354.45 million).
Chairman Chey personally acquired the stake owned by creditors. He has made an effort to purchase LG Siltron in a bid to create a synergy in the semiconductor sector based on SK Hynix. With the boom in the semiconductor industry, the price of wafers that are LG Siltron’s main products, has increased by 10 percent every quarter from last year, improving supply and demand.
Meanwhile, LG Siltron posted 34 billion won (US$30.13 million) in operating profit and 6.9 billion won (US$6.11 million) in net profit last year. |
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