A Merger Between Hanil Cement and Hanil Hyundai Cement to Become the #1 Cement Player in Korea

• After the market close today (17 July), Hanil Cement Co Ltd/New (300720 KS) and Hanil Hyundai Cement (006390 KS) announced that they will merge.

• Through this merger, Hanil Cement (on a combined basis with pro-forma sales of 1.74 trillion won in 2024) will become the largest cement company in Korea after Ssangyong Cement Industrial.

• We expect this merger to have a positive impact on both companies and they are likely to outperform the market and other local cement producers this year.

Hanil Cement production facility (Source: Hanil Cement)

After the market close today (17 July), Hanil Cement Co Ltd/New (300720 KS) (market cap of 1.3 trillion won) and Hanil Hyundai Cement (006390 KS) (market cap of 356 billion won) announced that they will merge. The merged company will be called Hanil Cement.

Through this merger, Hanil Cement (on a combined basis with pro-forma sales of 1.74 trillion won in 2024) will become the largest cement company in Korea after Ssangyong Cement Industrial (003410 KS) (sales of 1.7 trillion won in 2024). Hanil Cement's market share will exceed 20% in the domestic cement market in Korea.

They will merge by issuing new shares of Hanil Cement (surviving company) to shareholders of Hanil Hyundai Cement. There will be 1.0028211 shares of Hanil Cement common stock that will be allocated for each share of Hanil Hyundai Cement common stock. The merger date is November 1st.

Hanil Cement explained that it decided on the merger to reduce duplicate investments and improve management efficiency. It also expected that it would be able to achieve economies of scale by increasing market share by combining the assets and infrastructure of the two companies.

Main Dates of the Merger

• BOD Approval of merger - 18 July 2025

• Shareholders confirmation base date - 1 August 2025

• Notice of opposition to merger submission period - 1 to 18 August 2025

• Merger effective date of record - 1 November 2025

• New shares listing date - 21 November 2025

Our Thoughts on This Merger

This is a win-win merger for both Hanil Cement and Hanil Hyundai Cement. The Korea cement industry is currently facing enormous challenges, especially due to much lower demand for cement. Industry consolidation is needed to maintain profit margins. Post merger, the combined entity will become the largest cement company in Korea.

Valuations are attractive for both companies, although Hanil Hyundai Cement is trading at lower valuation multiples relative to Hanil Cement. We expect this merger to have a positive impact on both companies and they are likely to outperform the market and other local cement producers this year.