Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<div class="content-highlight">
<p>SK E&amp;S is taking its subsidiary <a href="https://www.smartkarma.com/entities/busan-city-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:14452:1" rel="noopener">Busan City Gas (015350 KS)</a> private through a tender offer. On 16 September, SK E&amp;S announced that it would buy 2,595,597 shares of Busan City Gas (23.6% stake) at 85,000 won per share. SK E&amp;S plans to spend 221 billion won in this tender offer. </p>
<p>Prior to this tender offer, SK E&amp;S had a 67.32% stake in Busan City Gas. SK E&amp;S plans to create a synergistic effect in terms of the eco-friendly energy business such as hydrogen and fuel cell power generation of SK E&amp;S with the hydrogen charging business operated by Busan City Gas.</p>
<ul>
<li>Following this news, Busan City Gas' share price reached limit up 30% to 80,300 won. </li>
<li>In order to provide adequate returns for the minority shareholders, SK E&amp;S is trying to complete this tender offer at a price of 85,000 won which is 40.62% higher than the average share price of the company in the past three months. </li>
</ul>
</div>


SK E&amp;S is taking its subsidiary Busan City Gas (015350 KS) private through a tender offer. On 16 September, SK E&amp;S announced that it would buy 2,595,597 shares of Busan City Gas (23.6% stake) at 85,000 won per share. SK E&amp;S plans to spend 221 billion won in this tender offer. 
Prior to this tender offer, SK E&amp;S had a 67.32% stake in Busan City Gas. SK E&amp;S plans to create a synergistic effect in terms of the eco-friendly energy business such as hydrogen and fuel cell power generation of SK E&amp;S with the hydrogen charging business operated by Busan City Gas.

Following this news, Busan City Gas' share price reached limit up 30% to 80,300 won. 
In order to provide adequate returns for the minority shareholders, SK E&amp;S is trying to complete this tender offer at a price of 85,000 won which is 40.62% higher than the average share price of the company in the past three months. 



SK E&S Makes a Tender Offer For Busan City Gas To Take It Private

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<p>This morning, SK E&amp;S, the major shareholder of Busan City Gas, announced that it would conduct a tender offer to all remaining outstanding shares of Busan City Gas (2,595,597 shares, 23.60%). The tender offer price is 85,000 won per share, and the purchase period is from today to the 15th of the next month. SK E&amp;S plans to apply for delisting of Busan City Gas.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/029/original/3.png?1631755933" class="editor-image img-responsive" data-smartkarma-image-id="230029"></figure></section><p>The total number of issued shares of Busan City Gas is 11,000,000. SK E&amp;S, the largest shareholder, owns 67.23%. And the number of treasury shares is 999,000 (9.08%). Therefore, the total remaining shares are 2,595,597 (23.60%), and SK E&amp;S plans to purchase all of these shares through a tender offer.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Shareholding"}'>Shareholding</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shares"}'>Shares</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"%"}'>%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Total shares"}'>Total shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-6]C[-1]">11,000,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2">100.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK E&amp;S"}'>SK E&amp;S</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7405403}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>7,405,403</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6732184545454546}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2">67.32%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":999000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>999,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.09081818181818181}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2">9.08%</td>
</tr>
<tr><td colspan="3"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ESOP"}'><strong>ESOP</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1075}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>1,075</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.00009772727272727273}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2"><strong>0.01%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KISWIRE"}'><strong>KISWIRE</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1266279}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>1,266,279</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.11511627272727273}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2"><strong>11.51%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Other minority shareholders"}'><strong>Other minority shareholders</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1328243}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-5]C[0]-sum(R[-4]C[0]:R[-1]C[0])"><strong>1,328,243</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.12074936363636364}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R8C2"><strong>12.07%</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: FnGuide &amp; KRX FIND"}'>Source: FnGuide &amp; KRX FIND</td></tr>
</tbody>
</table><p>From today to the 15th of next month is the tendering period, and SK E&amp;S pays cash. The cash payment date is October 20th. The tendering price is 85,000 won, a whopping 37.54% premium from yesterday's closing price. This is a premium of over 40% compared to the average price for the past 1 month and 3 months.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Pricing"}'>Pricing</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering price"}'>Offering price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":85000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'>₩85,000</td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Last close"}'>Last close</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":61800}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'>₩61,800</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Premium"}'><strong>- Premium</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.37540453074433655}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R2C2-R[-1]C[0])/R[-1]C[0]"><strong>37.54%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1W average"}'>1W average</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":61300}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula='=average(index(googlefinance(R[-2]C[1], "price", today()-5, today()), 0, 2))'>₩61,300</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Premium"}'><strong>- Premium</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.3866231647634584}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R2C2-R[-1]C[0])/R[-1]C[0]"><strong>38.66%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1M average"}'>1M average</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":59659.09090909091}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula='=average(index(googlefinance(R[-4]C[1], "price", today()-30, today()), 0, 2))'>₩59,659</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Premium"}'><strong>- Premium</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.4247619047619047}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R2C2-R[-1]C[0])/R[-1]C[0]"><strong>42.48%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"3M average"}'>3M average</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":60069.354838709674}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula='=average(index(googlefinance(R[-6]C[1], "price", today()-90, today()), 0, 2))'>₩60,069</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Premium"}'><strong>- Premium</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.4150310125392692}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R2C2-R[-1]C[0])/R[-1]C[0]"><strong>41.50%</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART &amp; KRX"}'>Source: DART &amp; KRX</td></tr>
</tbody>
</table><div class="content-highlight"><p><strong>SK E&amp;S plans to pursue delisting after acquiring shares through a tender offer. According to the stock market listing regulations, if the largest shareholder owns more than 95% of the total issued stock of a target company, they can apply for voluntary delisting.</strong></p></div>

This morning, SK E&amp;S, the major shareholder of Busan City Gas, announced that it would conduct a tender offer to all remaining outstanding shares of Busan City Gas (2,595,597 shares, 23.60%). The tender offer price is 85,000 won per share, and the purchase period is from today to the 15th of the next month. SK E&amp;S plans to apply for delisting of Busan City Gas.The total number of issued shares of Busan City Gas is 11,000,000. SK E&amp;S, the largest shareholder, owns 67.23%. And the number of treasury shares is 999,000 (9.08%). Therefore, the total remaining shares are 2,595,597 (23.60%), and SK E&amp;S plans to purchase all of these shares through a tender offer.







Shareholding
Shares
%


Total shares
11,000,000
100.00%


SK E&amp;S
7,405,403
67.32%


Treasury shares
999,000
9.08%



ESOP
1,075
0.01%


KISWIRE
1,266,279
11.51%


Other minority shareholders
1,328,243
12.07%

Source: FnGuide &amp; KRX FIND

From today to the 15th of next month is the tendering period, and SK E&amp;S pays cash. The cash payment date is October 20th. The tendering price is 85,000 won, a whopping 37.54% premium from yesterday's closing price. This is a premium of over 40% compared to the average price for the past 1 month and 3 months.





Pricing

Offering price
₩85,000



Last close
₩61,800


- Premium
37.54%


1W average
₩61,300


- Premium
38.66%


1M average
₩59,659


- Premium
42.48%


3M average
₩60,069


- Premium
41.50%

Source: DART &amp; KRX

SK E&amp;S plans to pursue delisting after acquiring shares through a tender offer. According to the stock market listing regulations, if the largest shareholder owns more than 95% of the total issued stock of a target company, they can apply for voluntary delisting.

Busan City Gas Tender Offer at a Whopping 40% Premium by SK E&S:

South Korea

Busan City Gas Co., Ltd. sells and distributes evaporated liquefied natural gas (LNG) in Pusan city and Gyeongnam area.  The Company also sells energy related products such as gas boilers and gas pipes.

Busan City Gas (015350 KS)

SK E&S Makes a Tender Offer For Busan City Gas To Take It Private

SK E&S is taking its subsidiary Busan City Gas private through a tender offer. SK E&S announced that it would buy 2,595,597 shares of Busan City...

Douglas Kim

Busan City Gas Tender Offer at a Whopping 40% Premium by SK E&S:

This post details the tender offer to Busan City Gas minority shareholders by SK E&S (the major shareholder) and looks at various trading angles.

Sanghyun Park