SK may need over $4 bn to maintain SK Hynix as unit under new FTC law

2018.10.11 13:52:51 | 2018.10.11 13:53:15

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South Korea’s third largest conglomerate SK Group may have to reorganize SK Telecom into a holding structure and purchase additional 5 trillion won ($4.4 billion) worth shares in SK Hynix to keep the lucrative chipmaker a unit under its flagship telecom company, according to a report by a local securities company

To comply with new Fair Trade Act designed to change the way founding families wield influence over the conglomerate units with small stake, SK Holding would have to mull ways to keep SK Hynix under its family tree, Daishin Economic Research Institute said in a report.

One option will be splitting up SK Telecom into holding and operational entity to place the chipmaker under the holding company.

The new holding regulation requires an ownership of 30 percent instead of current 20 percent to define a company its subsidiary. SK Telecom with 20.1 percent interest in SK Hynix will need another 5.54 trillion won to meet the new threshold, the report said.

SK Group’s management is relatively stable than other large conglomerates with combined holdings in SK names by families, related individuals and companies at 59.13 percent, higher than the average of 54.39 percent of other large chaebols, the report said.

The Fair Trade Commission (FTC) in August proposed tougher antitrust rules that are expected to more than double the number of companies falling under scrutiny as a preemptive action in line with the liberal government’s tightened oversight on Korea’s family-owned chaebol groups.

The bill, which would be the first revision to the antitrust law in 38 years, needs to pass the National Assembly in November.

By Park Jae-young and Lee Ha-yeon

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