[THE INVESTOR] Shares of Woongjin Group’s education and publishing unit have been on a downward spiral since it announced plans to acquire Coway, a water purifier company.
The group announced on Aug. 31 that its subsidiary Woongjin Thinkbig would be acquiring Coway, and not its holding firm. It plans to raise funds worth around 170 billion won (US$152.53 million) by issuing new Woongjin Thinkbig stocks, and fund 40 billion won for the subsidiary.
Woongjin Thinkbig’s stock price closed at 4,900 won on Sept. 3, down 25.3 percent from the previous session. The shares opened lower at 4,825 won on Sept. 4.
According to local reports, the sudden plunge was due to concerns that Woongjin Group might not be able to exercise its rights of first refusal if the acquisition takes place through its subsidiary. The group, which originally owned Coway, sold off its entire stake to private equity firm MBK Partners for 1.2 trillion won in 2012, after reaching a deal on rights of first refusal.
Woongjin Group, however, said that the speculations are unfounded because it currently cannot exercise the rights of first refusal as no third party has expressed any interest in acquiring Coway.
“We think the decline in share pice is because of our plan to issue a large amount of new shares, which often happens,” a Woongjin Group spokesperson told The Investor. “We are hoping that the stock price will bounce back after a while.”
By Song Seung-hyun (email@example.com)