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SKT, STX shares slide on Hynix bid

With little effect expected from acquisition of Hynix Semiconductor, SK Telecom shares fell to the lowest this year on Monday.

On Friday, SK Telecom and STX Group submitted letters of intent to acquire the world’s second-largest chip maker Hynix. The 15 percent stake in the chipmaker is expected to fetch around 2.5 trillion won ($2.4 billion). Hynix closed at 26,450 won, down 0.56 percent from Friday. SK Telecom shares closed at 144,000 won, the lowest seen this year.

While SK Telecom, and through it the SK Group, is hoping to diversify its portfolio and get its hands on a business far less tightly regulated than telecommunications services, market watchers say acquiring the chipmaker is a dubious venture for the country’s largest mobile carrier.

“The synergy effect gained by investing in the semiconductor business, which has little connection to telecommunications, will be insignificant. In addition, as the semiconductor industry is sensitive to changes in the economy, there is a large variability in profits,” Korea Investment and Securities Co. analyst Yang Jong-in said in a report.

Other local analysts echoed the view, with some raising concerns that the large investments semiconductor businesses require each year could prove problematic for SK Telecom.

However, SK Telecom’s potential competitor in the bid for Hynix, STX Group is not fairing much better in terms of both share prices and outlook on potential benefits from acquiring the chipmaker.

STX Corp. shares closed at 20,350 won, down 2.86 percent from Friday.

“Neither will receive a synergy effect, but there are only one or two firms in Korea that will be able to create synergy by taking Hynix,” Hana Daetoo Securities analyst Lee Ga-geun said. He added that both SK Telecom and STX Group appear to be considering Hynix as the means to diversify their business portfolio.

“But, if neither will receive synergy, the market seems to prefer SK Telecom as it has a strong parent company. As for STX, the group may have problems (in raising funds), which will in turn lead to concerns for winner’s curse.”

By Choi He-suk  (cheesuk@heraldcorp.com)
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