WONIK HOLDINGS's affiliate TLI has withdrawn from the planned absorption merger with WONIK D2I set for July 1. This decision came as TLI assessed that pushing through with the merger given WONIK D2I's performance was below expectations could excessively burden TLI.
According to the Financial Supervisory Service electronic disclosure system on the 10th, TLI, a fabless (semiconductor design specialized company) subsidiary of WONIK HOLDINGS, has withdrawn its decision to merge with another subsidiary, WONIK D2I, which was set for the end of last month. This comes about three months after the board decided on the merger.
Initially, TLI and WONIK D2I sought to enhance management efficiency through the absorption merger. TLI specializes in timing controllers (T-Con) and display driver ICs (DDI), which are core semiconductors for display panels, while WONIK D2I designs and develops DDIs for OLED. Given their similar business operations, they aimed to increase human and technical synergies through organizational integration of the research and development (R&D) sector and management support sector.
In the display driving process, display semiconductors play a key role. First, the image data output from the device is converted into a format that the display panel can understand via the timing controller. Then, the converted signal is transmitted to the display driving IC (DDI or D-IC), which precisely adjusts the voltage required for each pixel, thereby displaying the final image on the screen.
Additionally, improving the financial structure was cited as a motive for the absorption merger. WONIK D2I borrowed 2.5 billion won from WONIK HOLDINGS and 5 billion won from TLI in May this year due to its continued poor performance. However, despite ongoing financial support, the management situation did not improve, and TLI ultimately attempted to restructure by absorbing WONIK D2I.
As of the end of 2024, WONIK D2I had total assets of 6.914 billion won and liabilities of 33.879 billion won, leading to a state of capital impairment, with liabilities reaching about five times the assets. Moreover, after recording a net loss of 8.164 billion won in 2023, WONIK D2I recorded a net loss of 30.919 billion won in 2024. While TLI was not in a state of capital impairment, it showed a net loss of 10.6 billion won during the same period.
However, just three months after deciding on the absorption merger, TLI announced it was withdrawing the merger, citing "rapid changes in the business environment and the intensification of managerial uncertainties" as reasons. It added, "Given the changing external conditions, it is a priority to reorganize each company's business structure and reestablish mid- to long-term strategies before proceeding with the merger."
The "change in the business environment" cited by TLI is interpreted as a deterioration in the display market. An industry source noted, "As competition in the display market intensifies, the uncertainty of orders for display companies like Samsung is increasing, which is also impacting the display semiconductor market and hindering business progress."
As a result, industry observers expect WONIK D2I's second-quarter performance to be worse than anticipated. One industry source stated, "WONIK D2I's second-quarter performance is expected to fall short of expectations," adding, "If that happens, TLI, the acquiring corporation, will likely face excessive burdens."
The company stated, "In a situation where business uncertainties are increasing, merging WONIK D2I, which seems likely to have poor second-quarter results, could infringe on the rights of minority shareholders of TLI," and noted, "We proactively withdrew from the absorption merger to protect the rights and interests of shareholders."