Concerns Grow Over Valuation Amid Tariff Uncertainty
Acquisition of Chey Taewon's Personal Stake Becomes Key Issue
Negative Sentiment Rises After SK Telecom USIM Incident... Fears of Following in MBK's Footsteps
During the process of selling SK Siltron, SK Group's semiconductor wafer manufacturing subsidiary, a variety of factors have emerged as variables, ranging from U.S. tariff policies to the recent SK Telecom USIM incident. It is expected that price negotiations will be more complicated and drawn-out than initially anticipated.
According to the investment banking (IB) industry on May 13, SK Group plans to receive preliminary bids from private equity fund (PEF) managers either at the end of this month or early next month. In addition to Hahn & Company, the most likely acquisition candidate, other firms such as STIC Investments are also expected to participate. The biggest concern for private equity funds is, as expected, the price. While there are disagreements with SK Group, separate from that, private equity funds are also struggling with their own corporate valuation assessments. One PEF industry insider explained, "It is difficult to assess the company's performance and value because of the uncertainty surrounding U.S. tariff policies."
In fact, since last month, the U.S. Department of Commerce has been investigating the impact of imports of semiconductors, semiconductor manufacturing equipment, and related products on national security. The investigation includes semiconductor substrates and wafers, as well as both general-purpose and advanced semiconductors. If the Trump administration ultimately applies itemized tariffs to the semiconductor sector, it is highly likely that SK Siltron's performance will be affected. According to market research firm TechInsights, if a 10% semiconductor tariff is applied globally, the semiconductor market size next year is projected to shrink by 33% year-on-year to about $844 billion.
Critical public opinion toward SK Group Chairman Chey Tae-won is also a burden. One of the core issues in this deal is whether to acquire Chairman Chey's 29.4% stake in SK Siltron. While private equity funds want to acquire this stake together, Chairman Chey appears to want to retain it. Since this stake is his personal property, and he is currently undergoing divorce proceedings, it could serve as a 'source of funds' through dividends and other means. It is reported that private equity funds want to include a clause allowing them to dispose of the stake together when they exit their investment after the divorce proceedings are concluded.
However, from the perspective of private equity funds, it is easier to acquire the entire stake and later recover their investment freely through a sale or IPO. In addition, amid the recent public backlash over the SK Telecom USIM incident, criticism is mounting over the possibility that Chairman Chey's stake could serve as his 'source of funds.' When Chairman Chey recently announced that he would not attend the National Assembly hearing regarding the SK Telecom incident, lawmakers even warned that they were considering filing a complaint. With negative sentiment toward private equity funds already high following MBK Partners' Homeplus rehabilitation filing, there is reluctance to become the center of public criticism again.
An IB industry official stated, "There are many unexpected external variables, and with the presidential election approaching, most deals are at a standstill," adding, "It will be difficult for the SK Siltron sale to gain momentum in this situation."
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