Hynix Stock Jumps as Solidigm IPO Plans Are Scrapped
SK Hynix scrapped plans for a U.S. listing of its Solidigm flash-memory unit after shareholder opposition and regulatory scrutiny. The company also halted a…
SK Hynix scrapped plans for a U.S. listing of its Solidigm unit after shareholder opposition and regulatory scrutiny raised concerns about the interests of minority investors. The decision also halts a pre-IPO investment process that had been pursued alongside the potential offering.
The move puts a proposed route to public investment in the flash-memory subsidiary on hold. Solidigm had selected Goldman Sachs Group Inc. and Morgan Stanley as lead banks for a potential U.S. listing next year, according to Bloomberg.
There is no longer an IPO plan.
SK Hynix’s reversal follows concerns from South Korean regulators that listing Solidigm separately could amount to a “duplicate listing” and dilute the interests of existing shareholders. The company also stopped the related pre-IPO investment process, according to a regulatory filing on Friday, Bloomberg reported.
Regulators raised minority investor concerns
Financial Supervisory Service Governor Lee Chan-jin told lawmakers earlier this week that both the Financial Services Commission and his agency viewed Solidigm as falling under restrictions on duplicate listings. The regulatory concern centers on whether a separate listing of a subsidiary could disadvantage shareholders in its parent company.
The issue has broader implications for SK Hynix investors because the proposed offering was tied to the ownership structure of a business within the chipmaker. With the listing and associated investment process halted, the plan to bring in outside investors through those routes is no longer proceeding, based on the company’s reported decision.
The controversy has also become a test of Seoul’s efforts to strengthen corporate governance and protect minority shareholders. Those efforts are part of a wider push to address the country’s chronic equity undervaluation, often called the “Korea discount,” Bloomberg reported.
For investors, the immediate development is not a new listing timetable but the withdrawal of the proposal amid regulatory objections. The source report did not provide a new timetable for a Solidigm offering or say whether SK Hynix plans to pursue a different structure.
Solidigm, SK Hynix’s flash-memory subsidiary, had been preparing for a potential U.S. listing next year with Goldman Sachs Group Inc. and Morgan Stanley selected as lead banks. SK Hynix has now scrapped that plan and halted the related pre-IPO investment process, according to Bloomberg’s report on the regulatory filing.
Source: finance.yahoo.com
