<Anchor> This
is the time to ease the difficult economy. Friendly Economic Times Today (11th) will also be with reporter Kim. It's too difficult to say that SK Telecom is splitting up the company. Please explain what this means.
<Reporter>
Corporate spin-off refers to splitting a company that was originally one into two or more.
As the company grows, it will get too big. In addition, since it can jeopardize profitability, it is often carried out in order to lighten the size by dividing the business units and make decisions quickly.
There are two types of division: human division and physical division. First, human division is often referred to as horizontal division. Both companies become legally independent legal entities.
This time, SK Telecom separates SK Hynix and 11st to create a new investment company, which can be listed on the stock market immediately after the spin-off.
A physical split, on the other hand, splits the newly created company vertically. The parent company is establishing a new subsidiary with a 100% stake. Recently, LG Chem decided to physically spin off LG Energy Solutions, a battery division, and Mando, a self-driving business.
<Anchor> After
hearing the explanation, I think I understand what you are talking about. But what I'm curious about here is if I'm a shareholder who owns SKT stock. Then the company is split up like this. So I wonder what will happen to my stock.
<Reporter>
Yesterday, SK Telecom made a resolution to spin-off, and the split ratio is about 0.6 for the surviving company, SK Telecom, and about 0.39 for the newly created company.
SK Telecom shareholders will share their shares in this ratio in the future. However, you should consider this as well as SK Telecom also splits the shares into one-fifths at par.
So, if you are a shareholder who owns 20 shares of SK Telecom, first of all, you will have 100 shares, which has increased five times due to the par split.
Here, according to the split ratio I mentioned earlier, you will receive 60 shares of the surviving company and 39 shares of the new company.
The part that falls below the decimal point is converted to the closing price on the day of listing and paid in cash.
The spin-off is on November 1 of this year, and the company's stock trading is suspended for a month from October 26 to November 26. It will be listed on the 29th of November.
Shareholders' shares are divided on the day of listing. Anyone who bought shares before October 26th will have their shares split on November 29th.
On the other hand, shareholders who own shares of LG Chem or Mando will only own the shares of the existing company. Shares of the new company will be held only indirectly.
<Anchor>
So, which of these two methods is more advantageous to shareholders?
<Reporter>
In general, it is said that a physical spin-off is beneficial to companies, while a personal spin-off is seen as advantageous to minority shareholders.
A physical spin-off allows the parent company to maintain 100% control over its subsidiaries.
It can also attract external investment through subsidiary IPOs. On the other hand, the parent company may lose competitiveness as its main business exits.
Shareholders who only own the parent company's stock have to bear this risk. So, when LG Chem decided to split up last year, shareholders strongly opposed it.
The reason the share price of LG Chem has risen so much is because of the battery business. If you do a physical split, you will not be able to receive a single share of LG Energy Solutions, which will become a subsidiary.
In addition, Mando recently decided to physically spin off its autonomous driving business, but its share price fell more than 11% yesterday due to concerns that the value of the parent company's stake would be diluted.
Then, why does SK Telecom conduct a division of personnel that is unfavorable to the company?
When I asked SK Telecom directly, he explained that he thought shareholder value was the most important thing, and that he decided that the split-up would be advantageous for active investment in the long term.
<Anchor>
If you listen to reporter Kim's explanation today, the most curious thing for viewers is if you buy stocks of companies that have been split like SKT and want to see if they rise.
<Reporter> The
spin-off is beneficial to shareholders in the long run. There are many such evaluations. Experts believe that this effect will come out one year after the split decision.
In one paper, we analyzed the stock prices of 99 companies that announced a spin-off, and found that they rose 8.72% in three months of listing and 19% after one year.
In particular, when spin-offs into other industries, the higher the share of the majority shareholder, the higher the shareholder value increases as the company is listed on the KOSDAQ.
On the other hand, in the case of a physical spin-off, there is no change in the number or contents of the shares held by the shareholders after the spin-off.
There is also an analysis that the share price increase effect is less than the spin-off due to the reasons that shareholders' control over the new company is weakening.
But these are general statistics. Each company has a different business situation, so you should consider the overall corporate value when making an investment.