The National Pension Fund (NPS) is set to freeze the plan for a merger between SK C&C and SK Holdings based on the judgment that it could undermine the share value of SK Holdings. The possibility of merger is, however, expected be high, despite NPS opposition.
The NPS said on June 24 that its Special Committee for Exercising Voting Share Rights deliberated the direction of exercising voting rights on the agenda for the two SK affiliates’ extraordinary general shareholders meetings scheduled on June 26, and decided to oppose the merger between the two SK affiliates.
The special committee explained that it opposed the merger plan on the judgment that the merger could hurt the interests of SK Holdings' shareholders when considering the merger ratio and the timing of selling out treasury stocks, though it understands the purpose and goal of the merger.
In addition, the committee decided that it will oppose the amendment of incorporation articles, appointment of directors, and wage ceiling increases for directors, which could happen after the merger.
The committee, consisting of nine scholars and experts recommended by the government, business associations and labor unions, determines the guidelines for exercising voting rights on the specific affairs, which are difficult for the operation department to judge.
The NPS, which is the second largest shareholder of SK Holdings with a 7.19 percent stake, said that the 1:0.73 merger ratio between SK C&C and SK Holdings is unfair because it is designed to benefit SK C&C shareholders.
In spite of the NPS announcement, SK officials are showing confidence that the merger will be successful in passing in the general shareholders meetings of the two SK affiliated companies as it planned.
“We understand the opinions of the NPS, but we will push ahead with the merger because most of our shareholders, including large shareholders, institutional investors, foreign investors, and financial institutions agree with the plan,” said the group in a statement.
SK C&C decided to merge SK Holdings on April 20 and name the merged company SK Corporation.
Market watchers said that the NPS decision may affect its decision on another merger plan between Samsung C&T and Cheil Industries, in which the pension fund holds a key. The NPS is the largest shareholder of Samsung C&T, owning a 10 percent stake in the construction and trade affiliate of the Samsung Group.