Posco Holdings will sell portions of its stakes in Posco International and Posco DX, raising 2.5 trillion won ($1.76 billion) to fund strategic investments.
The company's board approved the disposal of 36.43 million shares of Posco International on Friday, according to a regulatory filing. The transaction is valued at 2.02 trillion won, at 55,400 won per share. The board also approved the sale of 23.39 million shares of Posco DX for 481.75 billion won, at 20,600 won per share. Both transactions are scheduled for completion on Sept. 7.
The sales follow the business portfolio restructuring plan that Posco Group Chairman Jang In-hwa unveiled at a CEO Investor Day in early July. At the event, Jang laid out a blueprint for a "triple-core" business structure spanning industrial resources — steel — strategic resources including lithium, cathode materials, anode materials and rare earths, and energy resources covering LNG and renewable energy.
The group has set a target of investing 16.7 trillion won over the next three years to achieve combined sales of 187 trillion won and operating profit of 13.1 trillion won by 2035. Proceeds from the stake sales are earmarked for strategic resource investment projects and share buyback and cancellation.
Once the disposals are complete, Posco Holdings' stake in Posco International will fall from 70.71 percent to 50 percent, and its stake in Posco DX will drop from 65.38 percent to 50 percent. The company will retain its position as the largest shareholder in both units. Posco Holdings said the sales were intended "to secure strategic investment funds for resolving the holding company discount and enhancing corporate value."
Posco Holdings said it plans to enter into price return swap (PRS) contracts on both stocks, with a contract period of three years. A PRS is an over-the-counter derivative in which a company uses its shareholdings as the underlying asset in a contract with a financial institution, with any difference between the actual sale price and the reference price settled at maturity.
Analysts expect Posco Holdings may also sell additional shares in Posco Future M, in which it holds a 58.18 percent stake. In July, the company announced plans to optimize its ownership in listed subsidiaries to around 50 percent by the end of next year.
psj@heraldcorp.com
