Dongwon F&B: Delisting and Incorporation as a Wholly Owned Subsidiary of Dongwon Industries

• Dongwon Group's decision to merge Dongwon F&B and Dongwon Industries into one company is a positive move.

• Dongwon F&B will be incorporated as a wholly-owned subsidiary of Dongwon Industries and will be delisted.

• Post stock swap between Dongwon Industries and Dongwon F&B, the surviving entity (Dongwon Industries) is a likely candidate for KOSPI 200 inclusion in 2H 2025/2026.

Dongwon Group announced a major reorganization plan on 14 April. Dongwon F&B (049770 KS) (market cap of 658 billion won) will be delisted and incorporated as a wholly owned subsidiary of Dongwon Industries (006040 KS) (market cap of 1,426 billion won). Dongwon is one of the largest F&B groups in Korea. Dongwon F&B is expected to be delisted on 31 July.

Conclusion First

Dongwon Group's decision to merge Dongwon F&B and Dongwon Industries into one company is a positive move. There are some clear overlapping areas in the companies' food businesses that could result in higher synergies. Plus, we like the company's move to aggressively expand the food operations overseas.

In addition, post stock swap between Dongwon Industries and Dongwon F&B, the surviving entity (Dongwon Industries) is a likely candidate for KOSPI 200 inclusion in 2H 2025/2026. Valuations are cheap for both companies.