The POSCO group will switch to a holding system. The company’s board of directors approved on December 10 its plan to split POSCO into POSCO Holdings (the surviving company) and POSCO, a newly formed company that will carry out its steel activities.
“We believe that a transition to a holding system is necessary to ensure sustained growth of the group and an improvement in its corporate value”, explained a POSCO manager.
POSCO opted for a spin-off, in which a holding company owns 100 percent of the shares of an operating company. POSCO Holdings will be listed, while the newly created POSCO will remain unlisted. POSCO Holdings will control not only POSCO, but other affiliated companies including POSCO Chemical, POSCO Energy, POSCO International and POSCO E&C.
POSCO Holdings will act as the group’s control tower. His main tasks will include discovering future business drivers, managing investments and coordinating research and development (R&D). It will also control new activities such as hydrogen production and the development of raw materials for electric vehicle batteries. It will nurture new business with affiliate dividends and renew them when they reach a certain level of growth. It aims to triple its enterprise value by 2030.
The POSCO Group has stated that it will not list POSCO and other new subsidiaries to be created under POSCO Holdings. This decision aims to eliminate the fear of shareholders that the listing of these subsidiaries dilutes their shareholder value.
POSCO’s transition to a holding company system will be finalized at a shareholders’ meeting to be held on January 28, 2022. Institutional investors such as the National Pension Service of Korea, which has a 9.75 percent stake in POSCO, and BlackRock, a global group asset management company with a 5.23 percent stake, hold the key to the planned governance reform. The demerger plan must obtain the approval not only of the board of directors but also of the shareholders holding at least one third of the total number of shares issued.