[Click eStock] "Lotte Chemical's Acquisition of Iljin Materials Unlikely to Significantly Impact Stock Price"

[Asia Economy Reporter Minji Lee] NH Investment & Securities forecasted on the 12th that the impact on the stock price related to Lotte Chemical's acquisition of Iljin Materials would not be significant.

Lotte Chemical announced that its 100% subsidiary, Lotte Battery Materials USA Corporation (LBM), signed a Stock Purchase Agreement (SPA) for Iljin Materials common shares and subscription rights for new shares of Iljin Materials' subsidiary IMG Technology. The transaction amount is 2.7 trillion KRW.

Previously, the company disclosed that it participated in LBM's capital increase by injecting 275 billion KRW to facilitate LBM's SPA with Iljin Materials. LBM paid a deposit of 270 billion KRW, which is 10% of the acquisition price. Youngkwang Choi, a researcher at NH Investment & Securities, stated, "It is highly likely that the acquisition will continue to be conducted centered on LBM, and Lotte Chemical is expected to support LBM's funding through the utilization of its cash holdings and external borrowings."

Iljin Materials' battery foil production capacity is expected to expand from 60,000 tons this year to 225,000 tons by 2027. Lotte Chemical projects Iljin Materials' sales to reach 4.2 trillion KRW in 2027 and judges that it will have the financial strength to maintain net cash until 2027.

As of the previous day, Iljin Materials' market capitalization was 2.6191 trillion KRW. Lotte Chemical valued Iljin Materials at 5.0654 trillion KRW, effectively acquiring a 93% control premium (2.6354 trillion KRW). According to market consensus, Iljin Materials' fair enterprise value is 5.1921 trillion KRW.

Researcher Choi said, "Although it is true that the acquisition is being made with a high control premium based on the current market capitalization, this issue has been announced several times, so its impact on Lotte Chemical's stock price is expected to be limited."