Dongkuk Steel to merge with Union Steel in January 2015

Dongkuk Steel announced yesterday that it has decided to merge with its affiliate Union Steel in a bid to stabilize its financial structure and find a new channel for making a profit.

The company said that the merger will officially occur Jan. 1, 2015. It added that the merger ratio will be 1:1.78, meaning that a Dongkuk Steel share worth 1.78 will be allocated per one Union Steel share.

With the merger, Dongkuk could garner annual sales of 5.7 trillion won and assets worth 9.2 trillion won. Last year, Dongkuk had sales of 4 trillion won and 7.4 trillion won in assets.

Union Steel, which Dongkuk has a 64.5 percent stake in, produces color steel sheets and galvanized steel sheets, while Dongkuk is more focused on hot-rolled steel sheets. The merger will increase Dongkuk’s total steel production capacity by more than 10 million tons per year.

The company said it plans to also expand its overseas sales network with the merger.