To Enhance Enterprise Value
POSCO Group will switch to a holding company system. The company's board of directors approved on Dec. 10 its plan to divide POSCO into POSCO Holdings (the surviving company) and POSCO, a newly created company that will carry out its steelmaking business.
"We believe a transition to a holding company system is necessary to ensure the group's sustained growth and an enhancement of its enterprise value," a POSCO official explained.
POSCO has chosen a split-off, in which a holding company owns a 100 percent stake in an operating company. POSCO Holdings will be listed, while the newly created POSCO will remain unlisted. POSCO Holdings will control not only POSCO but other affiliates, including POSCO Chemical, POSCO Energy, POSCO International, and POSCO E&C.
POSCO Holdings will play the role of the group’s control tower. Its main tasks will include discovering future business drivers, managing investment, and coordinating research and development (R&D). It will also control new businesses such as hydrogen production and the development of raw materials for electric vehicle batteries. It will nurture new business with dividends from affiliates and spin them off when they reach a certain growth level. It aims to triple its corporate value by 2030.
POSCO Group said it will not list POSCO and other new affiliates to be created under POSCO Holdings. The move is aimed at eliminating shareholders’ concern that listing of these subsidiaries would dilute their shareholder value.
POSCO’s transition to a holding company system will be finalized at a shareholders’ meeting to be held on Jan. 28, 2022. Institutional investors such as the National Pension Service of Korea, which holds a 9.75 percent stake in POSCO, and BlackRock, a global asset management company with a 5.23 percent stake, hold the key to the planned governance reform. The split-off plan has to win endorsement not only from the board of directors but from shareholders with at least a third of the total number of issued shares.