PCB maker Isupetasys cancels M&A with carbon nanotube producer

South Korean printed circuit board (PCB) maker Isupetasys Co. has withdrawn a 300-billion-won ($210 million) deal to buy Jeio Co., one of the country’s three carbon nanotube (CNT) producers, in the face of shareholders’ protest.

In a regulatory filing on Jan. 23, Isupetasys said it had notified Jeio of the deal's termination after the seller failed to fulfill the obligations stipulated in their share purchase agreement. It did not specify what those obligations were.

The PCB manufacturer had agreed to buy an 18.1% stake in Jeio from its top shareholder and Chief Executive Kang Deuk-joo for 158.1 billion won.

The unit of chemicals-to-construction conglomerate Isu Group had also decided to secure additional shares through the purchase of Jeio's rights issue and convertible bonds for 141.6 billion won.

The exact size of the stake Isupetasys was supposed to buy in Jeio was not disclosed.

To finance the deal, Isupetasys planned to raise 550 billion won via a rights offering, of which about 300 billion won would have been used for the Jeio acquisition. Through the deal, it had hoped to venture into the CNT market, regarded as a next-generation battery material.

Its rights offering plan faced a strong backlash from shareholders, however. They questioned how appropriate it was for a PCB manufacturer to buy a secondary battery materials producer.

The Financial Supervisory Service also put the brakes on the rights issue plan, calling on Isupetasys to revise the securities report on the new share sale.

Isupetasys paid 15.8 billion won to Jeio in a contract deposit. It is now requesting the return of the deposit.

But Kang said in a note posted on Jeio’s website that the deal’s cancellation was a unilateral decision made by Isupetasys, and is thus invalid. To that end, it will seek compensation.

Meanwhile, Isupetasys will cut its rights offering to 250 billion won and use the proceeds for facility investment.

The new shares will be sold next month at 24,600 won, about 40% below their closing price of 40,900 won on Jan. 24. Its investors cheered the deal’s collapse, which drove its shares 28% higher on Friday.

Jeio’s share price remained flat at 14,000 won on Friday.

Write to Seok-Cheol Choi at dolsoi@hankyung.com
 


Yeonhee Kim edited this article.