SK hynix headquarters in Icheon, Gyeonggi, on Aug. 24NEWS1
SK hynix shareholders are mobilizing against a potential Nasdaq listing of California-based NAND flash subsidiary Solidigm, a push to prevent what they describe as a “duplicate listing” that could dilute the value of their holdings.
Minority shareholder platform Act is preparing to formally ask the Korea Exchange whether its guidelines on duplicate listings can also apply to subsidiaries listed overseas, according to the platform on Sunday. The move follows its request on Thursday that SK hynix reconsider plans to list Solidigm.
“The company says no listing has been decided, but media reports continue to say that preparations are underway,” said Cho Dae-hyeon, an expert at the Act’s corporate governance research institute.
“Because an overseas listing falls outside the Korean exchange’s direct listing review, the company needs to explain how it has taken shareholder protection into account,” said Cho. “The Korea Exchange also needs to set clear guidelines on the issue.”
The investment banking industry believes Solidigm is nearing the final stages of a pre-initial public offering (IPO) fundraising process that began in August.
Solidigm is considering Morgan Stanley and Goldman Sachs as potential underwriters, according to foreign media reports, including Reuters. Its valuation could reach as much as $150 billion in a listing.
SK Group’s semiconductor ownership structure follows a chain from SK to SK Square, then to SK hynix, AI Company and Solidigm.
SK hynix shareholders argue that listing Solidigm would add yet another company in the chain to the public market, after SK, SK Square and SK hynix. They say the market could assign a separate value to Solidigm’s core NAND flash and solid-state drive businesses, which could put downward pressure on SK hynix shares.
The logo of SK hynix is seen on its product during an exhibition in Seoul on Oct. 23, 2024.REUTERS/YONHAP
Shareholders have also voiced dissatisfaction with the second-quarter dividend paid last Wednesday.
The chipmaker posted an operating profit of 60 trillion won ($44.8 billion) in the second quarter alone and extended its record earnings streak to five consecutive quarters. However, its quarterly dividend was limited to 375 won per share.
SK hynix has since announced a 40 trillion won share buyback and cancellation plan. “We will pursue additional shareholder returns when it announces its third-quarter earnings,” the Korean chipmaker said.
SK hynix, however, believes a Solidigm listing could also enhance shareholder value and is calculating its potential impact. The company reportedly sees a possibility that the value of its stake in Solidigm could be fully reflected in SK hynix’s valuation, which has largely been driven by high-bandwidth memory and dynamic random-access memory.
Solidigm could also raise outside capital through a listing and use the proceeds for new production facilities and research and development, which could create additional business opportunities.
“It is more appropriate to view a Solidigm listing as a way to recoup investment from an acquisition and secure funding for further investment, rather than as a duplicate listing of a subsidiary,” said Kim Young-gun, an analyst at Mirae Asset Securities. “If this is coupled with a shareholder return policy that meets global standards, it could further strengthen the company’s standing.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
