Hanssem headquarters in Seoul / Courtesy of Hanssem
By Park Jae-hyuk
Recent shareholder actions taken by foreign hedge funds against SK Chemicals and Hanssem are expected to have a limited impact on the market, considering domestic laws and responses by other investors.
Teton Capital Partners, a Texas-based fund serving as Hanssem’s second-largest shareholder with an 8.64 percent stake, filed an injunction with Suwon District Court earlier this month asking it to ban Hanssem founder Cho Chang-geol and four affiliated persons from helping IMM Private Equity conduct due diligence on the furniture maker before its takeover.
Hanssem confirmed this Friday, a day after Lotte Shopping announced its decision to invest 299.5 billion won ($255 million) in a special purpose entity set up by IMM to acquire Hanssem.
Teton has urged the furniture maker’s largest shareholder not to provide the potential buyer with important information, such as licenses, assets and intellectual properties the company has, as well as major contracts it has signed.
The U.S. firm is said to have particularly complained about the buyer’s plan to acquire the largest shareholder’s stake for 220,000 won per share, without allowing other major shareholders to sell their stakes at the same price. Hanssem’s stock price closed at 117,000 won, Friday.
“Regarding the court injunction, our board of directors will take countermeasures in compliance with the law,” Hanssem said in its regulatory filing. “We will disclose the progress of this litigation in the future.”
Given that IMM has conducted due diligence since it signed a memorandum of understanding with Hanssem’s largest shareholder in July, Teton’s recent legal action does not seem to pose a significant problem to the acquisition deal.
In addition, most legal experts do not expect the court to accept Teton’s request, because domestic laws do not mandate that the largest shareholder talk with other major shareholders before selling its controlling stake.
SK Chemicals headquarters in Seongnam, Gyeonggi Province / Courtesy of SK Chemicals
SK Chemicals has been urged by Singapore-based Metrica Partners to sell its 18.3 percent stake in SK Bioscience upon the expiry of a share lockup period, Sept. 18, and to distribute a special dividend of 357,000 won per share.
“Your current share price of 278,000 won represents an 83 percent discount, which is an embarrassing indictment of the company’s governance,” Metrica wrote in a letter sent to SK Chemicals’ board last Wednesday. “Boards have a fiduciary duty to care about the share price.”
Metrica held less than a 5 percent stake in SK Chemicals as of the first half of the year, but is trying to join hands with other minority shareholders through a website it opened earlier this month.
SK Chemicals has yet to disclose its response to the foreign hedge fund.
According to securities industry insiders, there is a slim chance that SK Chemicals will accept the request, because the sale of its stake in SK Bioscience could have a negative impact on the subsidiary’s valuation.
Investors also appear to remain reluctant to bet on Metrica’s victory, given that its letter only had a temporary impact on the prices of SK Chemicals and SK Bioscience shares.
Although the price of SK Chemicals stock rose from 267,000 won to 290,500 won Wednesday and to 303,500 won Thursday, it eventually fell to 301,000 won Friday. The price of SK Bioscience’s shares, which temporarily dropped to 287,000 won from 307,500 won Wednesday, bounced back to 298,000 won Thursday and to 299,500 won Friday.Internet Explorer Channel Network