[비즈한국] On the 12th of last month, Samsung Securities016360, serving as an advisor to Hanil Cement003300, which is currently under investigation for alleged market manipulation, was subjected to a search and seizure by the Financial Supervisory Service (FSS) Special Judicial Police. Some in the industry speculated that Samsung Securities might have assisted in improper price manipulation. BizHankook investigated the matter.
In May of last year, Hanil Cement announced a plan to absorb and merge with HLK Holdings. Upon the announcement, suspicions arose that the merger method might be advantageous to the owner family.
At the time of the merger announcement, the owner family of Hanil Cement, including Chairman Hur Ki-ho, held HLK Holdings as a wholly-owned subsidiary through Hanil Holdings003300, in which they held a 66% stake. Conversely, the stake of the flagship affiliate, Hanil Holdings, in Hanil Cement was relatively low at 34.67% (55.41% including stakes held by specially related parties).
As a result, a structure emerged where increasing the value of HLK Holdings while lowering the value of Hanil Cement would benefit the owner family, leading to allegations that they profited from the undervaluation of Hanil Cement.
When conducting a merger for a listed company, the standard method for evaluating the company and determining the merger ratio is based on the reference market price or asset value. Generally, the reference market price is used; however, if the asset value is higher than the reference market price, the asset value can be applied to determine the merger ratio, as this is more favorable to the company's shareholders.
Hanil Cement’s asset value was higher than its reference market price. However, the basis for evaluating Hanil Cement was the reference market price, not the asset value. Hanil Cement’s asset value per share was 209,309 won, while its reference market price was around 85,787 won. It is interpreted that this allowed the owner family to further increase their control over Hanil Cement through Hanil Holdings. Hanil Holdings’ stake in Hanil Cement expanded from 34% before the merger to 60.9% after. The Special Judicial Police are conducting an investigation based on the view that Hanil Cement’s reference market price was lowered through stock price manipulation.
In this process, it became known that the Special Judicial Police had conducted a search and seizure of Samsung Securities, which provided corporate governance advice to Hanil Cement. The search of Samsung Securities' headquarters in Seocho-gu took place last month. Consequently, concerns were raised about whether Samsung Securities was involved in Hanil Cement’s market manipulation.
Samsung Securities stated, “The search and seizure by the Special Judicial Police at the time was conducted because Samsung Securities, which acted as an advisor for Hanil Cement’s corporate governance, possessed relevant materials,” adding, “The claims circulating in the market are entirely groundless, as the Special Judicial Police did not conduct the search because they had identified charges against Samsung Securities regarding Hanil Cement’s market manipulation.”
The FSS Special Judicial Police provided a similar response. The office stated, “As the matter is currently under investigation, it is difficult to provide a specific answer,” but also added, “As per Samsung Securities’ position, the search and seizure was not conducted because any charges against Samsung Securities related to Hanil Cement were captured.”
Hanil Cement responded, “We only know what has appeared in media reports regarding the market manipulation allegations related to our company,” and added, “We do not know what kind of relationship exists between Samsung Securities and our company.”