POSCO International to Merge with POSCO Energy... Birth of a Global Integrated Energy Company

Official Launch of Integrated POSCO International Next Year Following November General Meeting Approval

[Asia Economy Reporter Kiho Sung] POSCO International is taking a full-scale step to leap forward as a global major energy company by merging with POSCO Energy. The merger is expected to create a mega company with annual sales of about 40 trillion KRW and operating profit exceeding 1 trillion KRW.

On the 12th, POSCO International held a board meeting and approved the agenda to merge with POSCO Energy. The plan is to complete the merger on January 1 next year after obtaining approval at the shareholders' meeting scheduled for November 4.

The merger ratio between the two companies is 1 to 1.1626920, calculated based on the asset value of POSCO International and the intrinsic value of POSCO Energy. According to the merger ratio, the listed company POSCO International will issue new shares and deliver 46,780,340 shares to POSCO Holdings, the shareholder of POSCO Energy. The new shares of POSCO International are scheduled to be listed on January 20 next year. After the merger, POSCO Holdings will become the largest shareholder of POSCO International, holding 70.7% of the shares.

This merger was aggressively pursued to proactively respond to the major changes in the energy market amid the global supply chain crisis and to drive both quantitative and qualitative growth in the energy business.

POSCO International has expanded its business portfolio from trading-centered operations to energy and food sectors. Based on its successful experience with the Myanmar gas field in 2013, it has also focused on securing new reserves through exploration in Malaysia, Indonesia, and other regions. This year, it completed preparations to become a global energy company by acquiring Senex Energy in Australia.

POSCO Energy, as the first and largest private power generation company in Korea, operates gas businesses centered on downstream processes such as Incheon LNG power generation and Gwangyang LNG terminal projects, generating stable profits. Recently, it has expanded its business overseas, including power generation in Indonesia, and has actively entered renewable energy businesses such as solar and wind power generation.

Through this merger, POSCO International will complete the entire value chain of the natural gas business from exploration to production, storage, and power generation, securing momentum to accelerate growth investments in eco-friendly businesses such as renewables and hydrogen.

The synergies from the merger between the two companies can be summarized into three main points: ▲ streamlining and strengthening competitiveness in the energy business ▲ leading eco-friendly energy businesses ▲ contributing to national energy security.

A POSCO Holdings official stated, “The merger is the first signal of structural reform to secure synergy in group businesses after transitioning to a holding company, and it is being promoted as part of focused nurturing of POSCO International as a core affiliate of the POSCO Group.” He added, “As a core affiliate of the group, we plan to accelerate growth investments commensurate with the company’s scale, which will be very positive for the future corporate value of POSCO Holdings.”