Challenging Mega SPAC Merger... Reassessment of PIE's Value

Delay in Mega SPAC Merger with Over 30 Billion Won Public Offering
PIE's Per Share Merger Price 8,248 Won → 6,733 Won
Market-Friendly Valuation Presented Amid Overvaluation Controversy

As funds flood into the initial public offering (IPO) market, mergers with special purpose acquisition companies (SPACs) have shown somewhat sluggish performance. Mega SPACs with a public offering price of 10,000 KRW and a public offering amount of over 30 billion KRW first appeared in the IPO market in August 2022, but there have been no successful merger cases to date. The AI vision inspection company for secondary batteries, PIE, which is pushing for a merger with Hana Financial 25th SPAC, has once again lowered its corporate value.

According to the Financial Supervisory Service's electronic disclosure system on the 19th, PIE and Hana Financial 25th SPAC adjusted the merger ratio from the original 1 to 1.21 to 1 to 1.49. This resulted in lowering PIE's per-share value from 8,248 KRW to 6,733 KRW. The market capitalization of PIE after the merger also decreased to 270.3 billion KRW.

Previously, on May 23 last year, PIE decided to absorb and merge with Hana Financial 25th SPAC. At that time, PIE's per-share value was estimated at 13,538 KRW. This was due to the sharp rise in secondary battery-related stocks in the first half of last year, which led to a higher evaluation of PIE's earnings value. As SPAC shareholders raised doubts about PIE's corporate value, the merger ratio was readjusted.

PIE provides its customers with a self-developed smart factory solution that integrates and analyzes vast data collected from existing inspection equipment, enabling predictions of future process abnormalities and defects. It has secured major domestic and international battery manufacturers and automobile companies as key clients. PIE has a lineup of inspection solutions for all types of medium-to-large secondary batteries, including prismatic, pouch, and 21-pi cylindrical types. It is leading the inspection solution market by researching and developing vision inspection technologies necessary for next-generation secondary battery processes, including all-solid-state batteries.

As of the end of last year, PIE's order backlog stood at 65 billion KRW, and it expects additional orders as secondary battery manufacturers continue to invest in facilities. Demand for PIE's technology, which can improve production yield and manufacturing line stability, is increasing.

PIE and Hana Financial 25th SPAC plan to hold an extraordinary general meeting of shareholders on the 12th of next month to approve the merger agenda. If the shareholders' meeting passes, the merger date will be May 17, followed by the listing of the merger new shares in June. A PIE official stated, "During the investor relations (IR) activities, we proposed a market-friendly corporate value and decided to proceed with the merger listing," adding, "We will carry out the remaining merger process at a level that satisfies PIE and Hana Financial 25th SPAC shareholders and prospective investors."

Choi Jeong-il, CEO of PIE, said, "Immediately after the merger listing, the circulating shares will be about 22% of the total issued shares," and added, "Since a significant portion of the circulating shares are strategic friendly shareholders, the possibility of an overhang after listing is low."

Creates, which was pursuing a merger with another mega SPAC, NH SPAC 20th, withdrew its listing on the 21st of last month. At that time, Creates explained that it would prove its corporate value through performance and receive market re-evaluation. Creates aimed to secure 50 billion KRW in cash by merging with NH SPAC 20th, but after ongoing controversies over overvaluation of corporate value, it temporarily postponed the listing.