M&A deal does more harm than good on stock prices amid bearish run in Seoul

Kang Woo-seok and Jenny Lee 2022. 6. 21. 13:57
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Ownership change has lost stock stimulating impact in overall bearish market in Korea with latest M&A subjects - South Korea’s paper producer Youngpoong Paper and biggest polyimide (PI) film manufacturer PI Advanced Materials – joining the downward spiral.

Since Youngpoong Paper announced its preferred bidder on Tuesday last week, its shares have skidded nonstop. The stock nosedived 28.2 percent in one day immediately after the announcement as investors dumped Youngpoong paper shares on disappointment over the new owner candidate Daiyang Metal with no experience in paper manufacturing. Its market cap was about 140 billion won ($18.6 million), merely bigger than Youngpoong’s 130 billion won.

Youngpoong Paper shares were up 1.25 percent to 7,280 won in Tuesday’s early trading after losing 4.13 percent to close at 7,190 won ($5.57) on Monday.

Shares of PI Advanced Materials, which is also the world’s No.1 PI film manufacturer, plunged 29.2 percent for 10 days until Monday after its announcement that Baring Private Equity Asia (PEA), a Hong Kong-based private equity fund, would buy the firm. The selloffs were partly trigged by the overall bearish mood in the global stock market.

Investors were also disappointed by the lack of stock-lifting news after the deal.

PI Advanced Materials shares were down 0.42 percent to 35,600 won in the early trading on Tuesday.

Swimwear brand Barrel disclosed that apparel firm The Nature Holdings would acquire its controlling stake on May 16. Upon the news, its share price plummeted 22.8 percent the next day.

According to the disclosure, The Nature Holdings agreed to buy 2.23 million shares of Barrel at 17,000 won per share including management right. Barrel’s shares closed at 12,800 won on the previous day. Barrel shares were down 0.65 percent to 7,670 won in the early session on Tuesday, extending the losing streak after falling 4.69 percent to finish at 7,720 won on Monday.

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