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Hanwha CEO
Kim Seung-youn |
By Kim Hyun-cheol
Staff Reporter
In spite of a surprise win in the year's biggest merger and acquisition (M&A) competition, Hanwha Group is struggling on the local bourse, with shares of the business group and its affiliates continuing a staggered rally.
Despite, seeing an over 8 percent rally across nearly all affiliates ― including Hanhwa Securities and Hanhwa Non-Life Insurance ― Tuesday, this was not sustained Wednesday with Hanwha closing at 15,100 won ($10.1), down 0.7 percent and Hanwha Chemical dipping 9.8 percent to 4,170 won.
The rumor of a possible partner in the takeover of Daewoo Shipbuilding Marine & Engineering (DSME) helped the initial rise, with the National Pension Service mentioned as being interested in forming a consortium with the energy and chemical conglomerate.
In a surprise win in the bidding for DSME last week, Hanwha Group became one of the nation's top 10 chaebols in assets, but the cold shoulder from the stock market did not ease as shares of Hanwha and its affiliates kept falling.
The plunge, which started as its chances to buy a controlling stake in the shipbuilder got higher, became steeper immediately after Hanwha was selected Friday as a preferred bidder by the Korea Development Bank, DSME's main creditor in charge of the bidding process.
On Monday, Hanwha's shares plummeted by its daily limit down to 14,450 won, suffering a 15-percent fall for a second straight day. Most major stocks rose on the same day.
Hanwha shares were more than halved from 35,350 won on Oct. 15, when it emerged as a strong contender in the DSME bid competition as GS Group pulled out of a consortium with POSCO.
Questions on the company's liquidity for the takeover led to the downward spiral, analysts said, adding that shares of Hanwha and affiliates will stay low until a detailed plan is unveiled on how the money, estimated at up to six trillion won, will be raised.
``The three-week inspection next month will be a critical time for Hanwha shares,'' said Hwang Kyu-won, an analyst at Tongyang Securities. ``Buyers in a huge M&A deal have always struggled in the stock market, like Kumho Asiana when taking over Daewoo Construction and Korea Express.''
Due to a clogged cash flow of late, induced by the current financial crunch, uncertainty on funding seems to be influencing stock prices much more than usual, Hwang said.
Still, some said their prices were obviously underestimated.
``Even though Hanwha is confirmed as the final bidder, the recent downfall is too harsh for the company,'' Lee Jung-heon, an analyst at Hana Daetoo Securities, said. The appropriate price should be around 35,000 won, he added.
hckim@koreatimes.co.kr
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