M&A rumors -- only smoke without fire?

By Kim Da-ye

Rumors over large-scale mergers and acquisitions (M&As) among Korean companies are spreading at an alarming speed and the Seoul bourse is stepping up to clarify them.

The Korea Exchange (KRX) Thursday requested Hyundai Engineering & Construction (E&C) to verify reports that it was moving to merge with Hyundai Amco.

The builder replied on the same day, “The rumor about the merger with Hyundai Amco is groundless.”

Hyundai Amco is a non-listed construction arm of the Hyundai Automotive Group specializing in building plants and other industrial facilities. The group acquired Hyundai E&C earlier this year, leaving the market to assume that the two will eventually merge.

When the stock exchange asks listed companies for verification of rumors or news reports on behalf of investors, they have to publicly announce the answer within a day.

On Wednesday, the KRX asked Hyundai Heavy Industries to resolve rumors that it is seeking to acquire Hynix Semiconductor, the world’s second largest supplier of computer memory chips.

Hyundai replied on the same day that it was undecided on the deal.

“We haven’t decided on anything regarding the acquisition of Hynix Semiconductor. If details of the deal become final within a month, we will make an official announcement,” the firm’s public disclosure said.

The stock exchange had to take action as various reports of those possibilities shook the share prices of the involved companies.

Hyundai E&C lost 6.66 percent on Wednesday, but recovered 0.51 percent upon its denial of the rumor.

Hyundai Heavy Industries shed 2.47 percent on Tuesday, 5.57 percent on Wednesday and 3.43 percent on Thursday as investors feared the major purchase would be too much a financial burden.

Hyundai’s ambiguous wording in the disclosure that didn’t outright deny its bid for Hynix only strengthened the market’s suspicions.

There was another recent rumor said Samsung Electronics is bidding for Nokia, a Finnish mobile phone maker. It was immediately dismissed by Nokia and Samsung.

About one week ago on June 2, the KRX had asked Samsung to answer about its plan to acquire an Israeli medical device maker called OrSense.

Samsung immediately denied it, calling the rumor baseless.