Shares of Korean rice-cooker manufacturer Cuchen Co. and its holding entity Bubang Co. surged by a 30-percent daily limit high on Monday on news of the full integration of the two companies.

Bubang in a disclosure on Friday said it will swap its shares with Cuchen stock in a ratio of 2.21: 1 to integrate the rice-cooker maker as a wholly-owned subsidiary. Shares of Kosdaq-listed Bubang hit the 30-percent daily limit in just 30 minutes after trading opened on Monday and closed the day at 3,655 won ($3.08), up 29.84 percent from the previous session’s close. Cuchen shares also rallied on the day and finished 29.35 percent higher at 8,330 won.

Cuchen is one of Korea’s major rice-cooker makers. It was spun off from Bubang, its holding entity that also has retail and IT consulting service subsidiaries, as a separate entity in May 2015. After the demerger, Cuchen joined the secondary Kosdaq bourse where Bubang was already listed, causing cannibalization, which means an erosion of the stock value of both companies, said a KB Securities analyst.

Following the integration, Bubang will be able to reflect the performance of Cuchen, its mainstay business unit, in its financial statement, a move that is expected to give a boost its stock value. The merger also would allow Bubang and Cuchen to actively seek new growth engines as Cuchen has been grappling with falling sales in its rice-cooker business, the KB security analyst added.

Once the stock swap deal is completed, Cuchen will immediately take a step for voluntarily departing from the secondary Kosdaq bourse. Its dissenting shareholders will be able to ask the company to buy back the shares between July 26 and Aug. 14. Bubang and Cuchen aim to swap their shares on Aug. 27, and Cuchen plans to complete delisting by Sep. 16.

On Tuesday, Bubang shares ended 10.94 percent higher at 4,055 won while those of Cuchen fell 8.16 percent to 7,650 won, taking a breath from yesterday’s sharp gain.

By Jung Hee-young and Cho Jeehyun

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