SK Chem says no immediate plan to sell SK Bioscience stake

SK Chemicals Co., the top shareholder of South Korea's SK Bioscience Co., is not considering reducing its stake in the vaccine maker in the immediate future, but will look at the stake sale option if needed, its co-Chief Executive Jeon Kwang-hyun said.

Jeon's comments were made in response to the call by Singapore-based hedge fund Metrica Partners Pte. last September for SK Chemicals to sell part of its 68.43% stake in SK Bioscience. Metrica had argued the stockholding was not properly reflected in the share price of SK Chemicals.

The letter was sent in early September, ahead of the Sept. 18 expiry of the share lockup period of SK Bioscience, which post a strong debut on the Korea Exchange last March. The activist fund held less than a 5% stake in SK Chemicals as of early September.

"After taking into comprehensive consideration the timing of a stake sale, its impact on stock markets and our shareholder value, we will consider selling a stake (in SK Bioscience) if needed," Jeon was quoted as saying in reply to the letter, according to Metrica Partners on Oct. 29.

In the September letter, the hedge fund said SK Chemicals did not need to maintain a 68.43% stake in SK Bioscience. It claimed that the stake so completely dominated SK Chemicals’ valuation that it rendered the other businesses such as chemicals and pharmaceuticals totally insignificant.

In that regard, it advised the chemicals company to reduce its stake in the vaccine maker to 50.1% and return the proceeds from a stake sale, estimated at 4.2 trillion won ($3.6 billion), to shareholders in a special dividend.

To appease shareholders, SK Chemicals last month announced a bonus issue, or 0.5 of a share apiece and pledged to return 30% of its annual net profit to shareholders for the next three years starting from this year.

Metrica Partners welcomed the announcement of shareholder-friendly measures, which also included the 38.5 billion-won sale last month of the polyphenylene sulfide business to HDC Hyundai Engineering Plastics Co. But the hedge fund repeated its call for SK Chemicals to trim a stake in SK Bioscience.

Shares in SK Chemicals closed up 1.1% at 181,500 won on Tuesday, in line with a 1.2% rise in the broader market. But the stock has lost 38% since the letter from Metrica was made public on Sept. 8.

During the same period, SK Bioscience has declined 19%, underperforming a 6% slip in the Kospi index.

Write to Sul-gi Lee at surugi@hankyung.com
Yeonhee Kim edited this article.