Pine Group Restructures Governance Through Sale of Pine Technics

Acquiring Pine M-Tech Shares with Trading Profits
Strengthening Control Over the Group

The second-generation owner corporation of Pine Group sold Pine Technics and additionally secured shares of Pine M-Tech, which serves as the group's cash cow.

According to the Financial Supervisory Service's electronic disclosure system on the 10th, Codes, the largest shareholder of Pine Technics, along with nine others, signed a contract to transfer 5,070,751 shares (31.26%) of Pine Technics to Eom Jin-seong and one other person for 28 billion KRW. The price per share was 5,522 KRW.

Pine Technics is a company engaged in the LED lighting business and is an affiliate of Pine Group. Pine Group is a conglomerate that includes three KOSDAQ-listed companies such as Pine D&C and Pine M-Tech, as well as 14 unlisted companies. Pine Technics underwent a spin-off with Pine M-Tech in September 2022.

In this merger and acquisition (M&A) deal, the entity transferring the largest portion of shares is the corporation called "Codes." Codes is the largest shareholder holding 2,027,110 shares (12.5%) of Pine Technics. Upon completion of this deal, Codes will receive approximately 11.2 billion KRW in cash.

The largest shareholder of Codes is Hong Jun-gi, Executive Director of Pine M-Tech and son of Hong Seong-cheon, Chairman of Pine Group. Executive Director Hong holds 45% of Codes' shares. The remaining shares are held by Chairman Hong and other family members.

Born in 1988, Executive Director Hong started working at Pine Technics in 2016 and moved to Pine M-Tech as Executive Director of Corporate Planning during the spin-off. It is estimated that he has held shares in the family company Codes since around 2010.

Most of the Pine Technics shares that Codes sold this time were purchased from Chairman Hong Seong-cheon about six months ago. In August of last year, Chairman Hong transferred 1.4 million shares (8.79%) of Pine Technics to Codes for 1.484 billion KRW. The price per share was 1,060 KRW.

At that time, as the domestic stock market sharply declined overall and Pine Technics' stock price, which usually traded in the 1,200 KRW range, dropped to the 1,000 KRW range, Chairman Hong transferred the shares to Codes at the closing price on the transaction day without a control premium. This transaction made Codes the largest shareholder of Pine Technics.

Codes applied a control premium of about 280% in this recent stock transfer contract for the shares it had acquired. The shares bought for 1.484 billion KRW became worth 7.7 billion KRW. This means a profit of more than five times in about six months. The estimated profit is 6.3 billion KRW.

Regarding this, a Pine Technics official stated, "This transaction was not made with the intention of gifting," and added, "We cannot comment on matters related to the governance structure."

Meanwhile, Codes used the cash secured from this transaction to acquire 1,134,000 shares of Pine M-Tech held by Pine Technics. The transaction amount was 6.5 billion KRW. Essentially, Codes purchased Pine M-Tech shares with the profit from selling Pine Technics shares. After the transaction is completed, Codes' stake in Pine M-Tech will increase from 3.07% to 6.06%.