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| SK Telecom (SKT) CEO Park Jung-ho speaks at the company's general shareholders' meeting held in March at SKT's headquarters in central Seoul. / Courtesy of SKT |
By Kim Bo-eun
SK Telecom (SKT) announced Thursday it would split its shares five-for-one, as well as conduct a horizontal spinoff. The decision by the country's top mobile carrier is interpreted as a means to address possible complaints from investors as well as to boost its stock price over the long term.
The stock split comes while the telecommunications company is splitting into two entities ― plans have been approved by the company's board. The spinoff would create two entities ― one tentatively named SKT Investment. The spinoff will be effective from Nov. 1 this year, it said.
The spinoff ratio has been set as six for the surviving entity and four for the new entity based on net asset value. This would split SKT investors' shares proportionately into stocks in both companies, which could possibly give rise to complaints from investors as they see their number of SKT shares reduced, under the scenario a stock split does not take place.
The stock split will result in a larger number of shares for investors, which could appease them while their aggregate value would not change. After the split, SKT's total issued shares will come to 360,300,715, up from 72,060. The split would also slash SKT's stock price to 65,800 won as of its Thursday closing price of 329,000 won.
SKT said the split is aimed at boosting shareholder value. "The split facilitates the entry of new shareholders given the stock price is now more affordable," a company official said. In the longer term, the influx of new shareholders has the effect of bringing up the stock price.
SKT and the new entity will divide these stocks according to the 6:4 spinoff ratio. This will be reflected in the local stock market from Nov. 29, when the listing change and relisting for the companies will take place. Prior to this date, a month-long suspension of trading of SKT shares will go into effect from Oct. 26 to Nov. 26. Shareholders will be given cash in return for their fractional shares, which will be based on SKT's closing price as of Nov. 29.
"SKT and the new entity share the vision to boost corporate value and shareholder value by accelerating growth in their respective fields of businesses," the company official said.
The surviving entity ― SKT ― will focus on artificial intelligence (AI) and digital infrastructure and the new firm will invest in semiconductors and information and communication technologies (ICT). The latter entity is set to handle the exploration of various acquisition opportunities for SK Group's semiconductor affiliate SK hynix. SK hynix's stock closed at 123,000 won, Thursday, up 0.41 percent from Wednesday.
