This billionaire's 'terrible purchase' just made $14 billion in profits:
Kim Jae-hyunspent $3 billion to buy control of troubled Hynix Semiconductor. Ten years after being bailed out by South Korea’s government, the world’s second-largest chipmaker was losing money and its stock sliding amid a global slump in demand for PCs and memory chips. South Korea’s SK Group, the sprawling conglomerate Chey chairs, had a wireless carrier, an oil and gas company, a hotel operator but no presence in chipmaking.
The Hynix deal was also a turning point for Chey, now 58, emboldening him to make the kind of big bets that characterized SK under his father before his death in 1998. Chey demonstrated that confidence last June when SK Hynix joined a group of investors paying $18 billion to buy 49.9% of Japanese chip maker Toshiba Memory. Hynix also created an imperative for Chey to expand.
SK founder Chey Jong-kun walks with brother Jong-hyon to the opening of Sunkyong Synthetic Fiber's first production line; Suwon, 1969.Chey cut his teeth on smaller deals: in 2000, he engineered the takeover by SK Telecom of a smaller rival, Shinsegi Telecom, for 2.3 trillion won in cash and stock. Buying Shinsegi boosted SK Telecom’s market share overnight to 57% from 43%.
Chey returned in March 2016 as chairman of both SK Holdings and SK Hynix and led a renewed push for vertical integration at the chipmaker, buying suppliers of the wafers and gases that are SK Hynix’s raw materials. The next year, SK Hynix’s earnings more than tripled, and rose another 46% in 2018 to a record 15.5 trillion won. That kind of growth was bound to attract competitors. Now China’s chip companies pose a growing threat.
Chey has been diversifying into new industries, spending $3.2 billion to buy 12 companies in Europe, Southeast Asia and the U.S. in the past six years. In 2017, SK paid $459 million for two chemical lines from U.S.-based Dow Chemical. In March last year, it paid $75 million for a stake in Singapore-based ride-sharing company Grab. And in September, it paid $470 million for a 9.
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