Ha Sung-min, center, SK Telecom CEO, poses with Hynix CEO Kwon Oh-chul, left, and Korea Exchange Bank (KEB) senior executive Kim Hyo-sang during a ceremony commemorating SK buying a 3.4 trillion won stake in Hynix held in downtown Seoul, Monday. / Courtesy of SK Telecom
By Kim Yoo-chul
SK Telecom signed a much-anticipated deal for the purchase of a stake in Hynix Semiconductor, Monday, for 3.42 trillion won or some $3.02 billion.
SK said it had agreed with the board of Hynix to buy 21.1 percent of the world’s No. 2 memory chipmaker that includes 101.85 million new shares.
The new share sales plan was mostly aimed to allow the proceeds to flow into the chipmaker. Hynix was reeling from losses over the last few quarters as sluggish demand for chip-using consumer devices dragged down prices.
``It’s been confirmed that SK Telecom will buy the chipmaker for 3.42 trillion won. This includes 44.25 million existing shares, which is 6.4 percent out of the total 21.1 percent,’’ said a company spokeswoman Kim Ji-won.
Hynix board approved the plan to issue 101.85 million new shares to SK Telecom worth 23,000 won each, totaling 2.34 trillion won. SK Telecom will buy existing shares for 24,500 won each for a total of 1.08 trillion won.
``SK has given some 9.1 percent management premium to Hynix shareholders, which is not so bad,’’ said a top-level SK executive, asking not to be identified.
Park Hyun, a senior spokesman for Hynix, declined to comment as the chipmaker hasn’t been authorized to speak about the deal.
SK Telecom was the sole bidder for Hynix, which only trails industry leader Samsung Electronics after the shipbuilding firm STX Group dropped its ``controversial bid.’’ STX later announced that it was dropping all plans for acquisitions.
But it’s questionable whether SK Telecom will get any synergy from the labor- and cost-intensive chipmaker.
Chief executive Ha Sung-min said earlier the firm would transform Hynix into a company providing quality system-on-chip solutions, which are categorized as non-memory chips that are more profitable than conventional memory chips.
These are used to control entire computing systems and mobile application processors are an example. Memory chips such as DRAMs and NAND flashes just read and store data, and there sales are cyclical.
``SK is consistently saying that it is looking to the non-memory sector, however, that’s currently regarded as tough as Hynix is still heavily dependent upon the memory business,’’ said a fund manager from a Europe-based investment bank in Seoul adding he is considering selling SK Telecom shares.
``SK Telecom’s plan looks mid-to-long term. SK should unveil more details on how it will effectively develop Hynix’ non-memory strengths,’’ added the manager.
Hynix plans to invest more for NAND flashes in an apparent strategy to catch up with the booming sales of smartphones and tablets. NANDs store data even when switched off, therefore they are vital for high-end digital devices.
Park from Hynix said the chipmaker is mulling investing more in NAND, however, declined to unveil details citing the sensitivity of the issue.
Hynix shareholders have tried to get new owner for Hynix for a decade, however, previous attempts failed mainly because of the huge investment needed Hynix.
In the third quarter, Hynix reported a net loss of 562.62 billion won compared with a record net profit of 1.04 trillion won a year earlier amid a bearish market.