Dongguk CM Acquires Ajou Steel for 128.5 Billion KRW... Becomes Global No.1 in Color Coated Steel Sheets

Dongkuk Steel Group's cold-rolled steel business company and the No.1 company in the color steel sheet industry, Dongkuk CM, is acquiring Ajou Steel, the industry's No.4. Having chosen the color steel sheet sector for its first merger and acquisition (M&A) after the split, Dongkuk CM will establish itself as the world's largest color steel sheet company by production volume through this acquisition.

On the 6th, Dongkuk CM announced that it held a board meeting at its headquarters in Ferrum Tower, Jung-gu, Seoul, and approved the signing of a basic agreement related to the acquisition of Ajou Steel's shares.

Regarding this acquisition, Dongkuk CM explained, "It is a time when a strategic alternative is needed for sustained growth amid the slowdown in the domestic market growth of color steel sheets," adding, "We aim to establish a foundation for achieving economies of scale through combining with a company in the same industry and to gain synergy in core businesses."

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Dongkuk CM will acquire 42.5% of Ajou Steel's shares held by the largest shareholder (existing shares) for 78.5 billion KRW and acquire 8,620,690 new shares through a third-party allotment paid-in capital increase for 50 billion KRW, securing a total of 56.6% of Ajou Steel's shares for 128.5 billion KRW. Dongkuk CM plans to complete due diligence, sign the main contract, and obtain corporate combination approval within the year, then incorporate Ajou Steel as a subsidiary.

Through this acquisition, Dongkuk CM will move closer to achieving its mid-to-long-term strategy, 'DK Color Vision 2030.' With the corporate combination, Dongkuk CM's market share in the color steel sheet sector will increase from 29.7% to 34.4%, securing a leading position in what was previously a duopoly market. The domestic market share, which had slightly declined due to focusing on exports over the past three years, will also return to first place.

Dongkuk CM expects synergy effects from the acquisition of Ajou Steel, including ▲reduction of production costs ▲strengthening purchasing power through integrated procurement of raw and subsidiary materials ▲financial stabilization by utilizing available funds ▲expansion of export opportunities to countries such as Poland and Mexico ▲strengthening B2C business capabilities in color steel sheets for fire doors, elevator doors, and more.

Ajou Steel is a company with strengths in color steel sheets for home appliances. Upon acquisition by Dongkuk CM, it will be possible to restructure the business focused on color steel sheets for home appliances, and financial burdens from expanding production facilities in Gimcheon, Gumi, Mexico, and Poland are expected to be alleviated.

Dongkuk CM plans to complete the corporate combination within the year and maximize synergy through business restructuring between the two companies. By maintaining business stability through 100% employment succession of employees, it will separate and specialize the core steel business (B2B) and B2C business, clearly defining roles by bases such as Busan, Gimcheon, and Gumi plants to strengthen operational capabilities.

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To alleviate Ajou Steel's financial burden, Dongkuk CM is reviewing measures such as ▲reducing short-term maturing borrowings ▲improving borrowing interest rates ▲refinancing. Dongkuk CM aims to solidify a 1 million ton color steel sheet system, achieve sales of 3.2 trillion KRW, and exceed 5% operating profit within the next five years through Ajou Steel's management normalization.

Park Sang-hoon, Vice President and CEO of Dongkuk CM, said, "As Dongkuk CM, which has financial strength, acquires Ajou Steel, which has completed capital expenditures (CAPEX) related to the color steel sheet business, synergy will be maximized," adding, "We will expand R&D capabilities related to equipment and processes and strive for the development of eco-friendly technologies from an ESG perspective."

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