Solidigm IPO Sparks 'Double Listing' Controversy; Question Remains Over How to Persuade SK Hynix Shareholders

[Anchor]

Following news that Solidigm, the sub-subsidiary of SK Hynix specializing in data center storage devices, is pursuing an initial public offering, the Financial Supervisory Service has stated that it constitutes a double listing. As Solidigm's listing could significantly diminish the value of its parent companies' shares, backlash from shareholders is fierce.

Reporter Kim Hye-min has the details.

[Reporter]

In 2021, SK Hynix acquired Intel's NAND and SSD business to launch Solidigm.

Controlled through its U.S. intermediate holding company, AI Company, it is a sub-subsidiary that manufactures storage devices essential for data centers.

Foreign media outlets report that Solidigm has selected securities firms to oversee the IPO and is pushing to enter the U.S. market.

Solidigm's corporate value is estimated at up to 150 billion dollars, with the amount to be raised through the public offering projected at up to 15 billion dollars.

However, a controversy over double listing has emerged.

In the governance structure running from SK Inc., SK Square, SK Hynix, and AI Company to Solidigm, if Solidigm goes public, four of the five tiers in the structure would consist of listed companies.

If Solidigm issues new shares and sells them to outside investors, profits would have to be shared accordingly, which could dilute the value of the parent companies.

In fact, when reports regarding the IPO first surfaced in early August, SK Hynix shares plunged more than 10 percent in a single day.

FSS Governor Lee Chan-jin stated during a parliamentary audit that Solidigm's listing qualifies as a double listing.

[Lee Chan-jin / Governor, Financial Supervisory Service: Whether this qualifies as a double listing is something both the Financial Services Commission and we at the FSS have evaluated.]

If deemed a double listing, the SK Hynix board of directors will be subject to five major obligations, including shareholder impact assessments and the formulation of measures to protect shareholders, though a direct shareholder consent procedure is not legally mandated.

Some, including Bloomberg, offer a positive interpretation, noting that it is beneficial in that Solidigm can secure independent investment funds without relying on parent company capital.

[Kim Kwang-seok / Adjunct Professor, Graduate School of International Studies, Hanyang University: Because foreign investors can also invest from abroad, it has the effect of depriving existing investors of room for stock price growth. From the company's perspective, it could serve as a means to raise more capital.]

Now that financial authorities have declared their judgment that it constitutes a double listing, how the company will persuade existing shareholders of the necessity of the listing is expected to be the critical factor.

(Video Editing: Ahn Yeo-jin, Design: Jeegal Chan, Park Cheon-woong)
※ Please note: This article was translated by AI and may contain errors.