The South Korean stock market is becoming less attractive, said foreign companies citing lackluster demand, a little bit too much emphasis on shareholder relations and strict regulatory requirements. A growing number of foreign companies are opting for delisting from the country’s bourses, a move that would make it less cumbersome for foreign capitals to recoup investment.

On Friday in a regulatory filing, Alvogen Korea Co., the Korean unit of U.S.-based multinational pharmaceutical company Alvogen, issued a tender offer for 29,000 won ($26) per share to acquire 9.74 percent, or 1,150,000 shares, of the company. It would cost up to 33.3 billion won for the company to buy back its shares. Alvogen Korea needs additional 7.73 percent stakes only to delist itself from the Korea’s main bourse Kospi considering that the combined stakes of its largest shareholder’s holding in the company and treasury stocks already reach 87.27 percent.

Once Alvogen Korea readies itself with all the requirements for the delisting procedure, it would be leaving the Kospi 44 years after it first joined the market as Kunwha Pharmaceutical Co. in 1973. The company was rebranded as Alvogen Korea in 2012 after U.S. pharmaceutical firm Alvogen acquired Korean drug company Kunwha Pharmaceutical. The acquisition paved the way for the company’s performance to improve, and it later merged with Dream Pharma Corp., the anti-obesity drug manufacturing unit that Alvogen bought from Hanwha Group. Right after the merger, the company’s stock price rose to as high as 49,350 won, but it has lost more than 40 percent since then.

Alvogen Korea said it has decided to exit from the Korean stock market to speed up the company’s decision-making process and improve management flexibility. Industry observers also noted that Alvogen Korea financially backed by its multinational parent company does not need to seek for external funds any more.

Before Alvogen Korea, China-based garden machinery maker Wayport Co. in August this year also pulled out of the Korean stock market by successfully obtaining more than 95 percent of its issued shares.

Before their exit, many other foreign companies have already left or attempted to leave the Korean stock market. Toray Chemical Korea Inc., former Woongjin Chemical Co. acquired by Japanese chemical firm Toray Industries, in 2015 also announced to leave the local bourse. It managed to secure 90.59 percent stocks but the company is still listed on the Kospi because some of its shareholders have not agreed to the company’s buyback offer.

By Chung Woo-sung and Lee Eun-joo

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]