SKT, Paxnet Acquisition During the Week

SK Telecom will make an agreement of Paxnet Acquisition (www.paxnet.co.kr) during this week.

SK Telecom plans to present and pass the acquisition proposal of ‘Paxnet’ in the board of directors to be held in July 26.

SK Telecom finished the due diligence of Paxnet to calculate the latest purchase price. Staff concern said, “SK Telecom promised to take over all the staff of Paxnet and both companies are under the last negotiation to determine the CEO designation, price and acquisition conditions”.

Such as Goldman Sachs, Hyundai-Daum Internet Fund and HIKARI Partners including Park, Chang-Gi, the president of Paxnet, approx. 53% of major shareholder’s equities will be handed over to SK Telecom. The acquisition cost will be determined as KRW 5,300 per share (par value of KRW 500), which is currently the market price. In this case, the estimated acquisition costs are totally KRW 16 billion.

However, when the internet stock price jumped early in 2000, some large shareholders including HIKARI Partners which purchased the equities for high prices, have repelled this acquisition price. Accordingly, the total acquisition costs are flexible. If SK Telecom increases total securities through paid in capital increase of the third party allotment, the stock price is likely to increase, and so small amounts shareholders have repelled too.

SK Telecom has strengthened the wire/wireless Internet business by acquiring Paxnet after Lycos Korea. SK Telecom will be able to obtain ‘Mobile stock group’ as customers by providing the finance contents including the securities information of Paxnet through mobile phone and PDA. In addition, if SK Group acquires the card business of Jeonbuk Bank, it plans to construct the settlement system through mobile.

Established in May 1999, Paxnet has the 51% of market share, 450,000 members, 20 million-page views for site inquiry per day. Paxnet is the best securities information site in Korea.

Im-Sook Ha artemes@donga.com