SK oceanplant's management rights sale is stalled. The majority shareholder SK ecoplant wants to combine and sell the equity of the founders, who remain as the second-largest shareholders, but their expectations are so high that they cannot narrow the gap in their views on corporate value.
There are no drag-along rights or tag-along rights between SK ecoplant and the second-largest shareholders. SK does not have the authority to bundle the equity of the second-largest shareholders together for sale, so if they refuse to sell, SK will have to sell its equity separately. In this case, the equity ratio is only in the 30% range, which diminishes acquisition attractiveness.
According to investment banking (IB) industry sources on the 22nd, SK ecoplant has not reached an agreement on the sale price of its subsidiary SK oceanplant with former CEO Song Mu-seok and Chairman Song Jeong-seok of Samgang Metal.
SK oceanplant is the successor to Samgang M&T, established in 1996. Even after being acquired by SK ecoplant for about 460 billion won in 2021, the Song brothers remain as the second-largest shareholders. Currently, SK ecoplant holds 37.6% equity, while the Song family and Samgang Metal together hold 20.73%.
Since SK ecoplant first revealed the possibility of a sale last year (related article☞SK ecoplant is 'playing with' the sale of its subsidiary oceanplant), it has hoped to bundle and sell the equity of second-largest shareholders. With only a 37.6% equity, the company lacks controlling power, making it difficult to sell with a high management premium.
The equity sale price that SK ecoplant hopes for is said to be around 500 billion won. Given that the current market capitalization is about 1.1 trillion won, it reflects a management premium of about 20% attached to the market price of its holdings.
The Song brothers have reportedly maintained their stance that they will not sell their equity for this price. An IB industry source noted, "The second-largest shareholders already monetized their management rights through a sale in 2021, and they are not in immediate need of cash," adding that "the party feeling the pinch right now is SK ecoplant."
It is reported that there are neither drag-along rights nor tag-along rights between SK ecoplant and the Song brothers. In other words, SK ecoplant has no authority to bundle and sell the Song brothers' equity, and the brothers also lack the right to demand a joint sale when SK ecoplant sells its equity.
For SK ecoplant, which is focusing on restructuring for an initial public offering (IPO), this situation is undoubtedly disappointing. Since last year, SK ecoplant has been transforming into a corporation that supports the semiconductor industry. Last year, it acquired SK Airplus and semiconductor module maker Essencore, and last month, it incorporated SK trichem, SK resonac, SK materials jnc, and SK materials performance, which were under SK Materials.
An IB industry source stated, "Since SK ecoplant is establishing itself as a semiconductor service company, it is in a situation where it needs to sell oceanplant and environmental businesses quickly."
SK ecoplant is currently also pursuing the sale of its environmental subsidiaries, Renewon and Renewers. KKR and STIC Investments participated in the preliminary bidding, but reports indicate that only KKR proposed a valuation close to SK's expectations.