Acquisition of SK Siltron’s stake at 70.6% KRW 2.3 trillion
Deficit SiC business is expected to make a leap forward in liquidation, maximizing profitability
Wafer portfolio expansion

SK Siltron Gumi Plant. [Picture = SK Siltron] ė‚Žė§„ 확대 SK Siltron Gumi Plant. [Picture = SK Siltron]

Doosan Group’s decision to acquire SK Siltron’s management rights for 2.3 trillion won has led to a reasonable acquisition price in the stock market It is evaluating that it has a stable contract structure and is giving a positive outlook.

Earlier on July 31, Doosan signed a stock trading contract (SPA) to acquire 70.61% of SK Siltron’s stake held by SK.

The stake is a combination of 51.0% of SK’s direct holdings and 19.6% of its total revenue swap (TRS) contracts. The remaining 29.39% stake held by SK Group Chairman Chey Tae-won was excluded from the deal. In the future, it plans to promote 100% subsidiary through separate consultations.

On the 3rd, major securities companies such as Meritz Securities, Kiwoom Securities, Daishin Securities, and NH Investment & Securities all evaluated the acquisition positively by maintaining their buying opinions on Doosan or raising their target stock prices.

The stock market cited the fact that the acquisition price was set lower than expected in the market, that the contract structure was designed to favor Doosan, and that only the net business was acquired with the deficit business separated.

An attractive valuation is cited as a key positive factor for the acquisition. If the acquisition price of KRW 2.3 trillion of the 70.61% stake is converted based on 100%, the value of the stake is KRW 3.2575 trillion. As of the end of March this year, SK Siltron’s total corporate value (EV) is estimated to be about 5.86 trillion won, including 2.6088 trillion won in net deposits.

If 726 billion won of estimated pre-recursive operating profit (EBITDA) is applied next year, the pre-recursive operating profit (EV/EBITDA) is about 8.1 times the value of the acquired company. This is less than the average of 10.2 times next year for global wafer competitors such as Shinetsu, Sumco, and Global Wappers.

Kwon Min-gyu, a researcher at Kiwoom Securities, said, “The basic equity value was calculated at a lower level than the amount discussed in the existing market, alleviating concerns over the cash burden,” adding, “It is time for Doosan’s corporate value to be reevaluated because it made a sound acquisition centered on core assets and bought it cheaply.”

The introduction of an “unout (conditional payment)” clause that pays additional payments according to future performance was also well received by the stock market.

The contract included a condition that if SK Siltron’s annual EBITDA exceeds the standard amount from 2027 to 2034, an additional payment of 70.61% of the acquisition share to SK is applied to 40% of the excess.

The standard amount will be raised every year from 890 billion won in 2027 to 1.7 trillion won in 2034, which is 32% higher than SK Siltron’s best performance in the last three years in 2027.

In addition, if the quality certification of four items is completed for certain customers from this year to the first half of 2029, the company will pay 25 billion won per item multiplied by the share ratio, and share profits from the disposal if the sale price of U.S. Silicon Carbide (SiC) assets that are scheduled to be liquidated exceeds the book value.

Lee Kyung-yeon, a researcher at Daishin Securities, said, “We paid 10% of the down payment immediately after the contract and paid 90% of the balance early next year, the closing date of the transaction, reducing the immediate cash outflow. The conditional payment method is designed to share the upside with SK, but there is no downside burden, which is in Doosan’s favor,” and maintained the investment opinion purchase and target stock price of 1.84 million won.

This means that it has fixed the initial cost of the acquisition and blocked downside risks in case of poor performance, as it is a structure that pays additional payments only when performance improves and performance becomes visible.

The strategic choice of liquidating the silicon carbide (SiC) wafer business, which had been undermining profitability, and acquiring only the main business of superior silicon (Si) wafers is also expected to serve as a positive factor in enhancing corporate value.

SK Siltron achieved an operating profit margin of about 20% in its main business centered on 300mm silicon wafers on a separate basis last year, but recorded a net loss of 293.6 billion won on a consolidated basis due to the deficit burden of the SiC business.

Doosan will take over siltron in sound condition after completely separating the assets through the liquidation consultative body.

Yang Seung-soo, a researcher at Meritz Securities, said, “The liquidation of the SiC wafer business, which had an excessive deficit burden, is a strategic choice in terms of restoring profitability and highlighting the value of the main business rather than reducing short-term growth options,” and maintained the investment opinion and target stock price of 2.4 million won.

Through this acquisition, Doosan Group will complete vertical integration covering the silicon wafer area, which is a basic material for semiconductors, following Doosan Electronics BG, which produces copper clad laminate (CCL) for artificial intelligence servers, and Doosan Tesna, which is in charge of post-process testing of semiconductors.

SK, the main body of the sale, will also use the funds flowing through the sale to reduce the amount of separate net deposits amounting to 7.3 trillion won as of the first quarter and raise funds to continue its shareholder return policy such as expanding dividends, which is an efficient transaction for both companies.

Lee Seung-young, a researcher at NH Investment & Securities, said, “SK has decided to sell SK Siltron with the aim of securing financial resources to improve financial soundness and secure future growth engines,” adding, “It is expected to stabilize the financial structure by receiving the proceeds from the sale of SK Siltron, increasing profits from trademark use, and recovering dividend income.”