•   In accordance with the Article 530-2 or 530-11 of KCA, POSCO Energy’s division of by-product gas power plant will be split off from POSCO Energy and merged into POSCO.

•   Acquiring Company: POSCO

•   Acquired/Target: POSCO Energy’s division of by-product gas power plant

Major Effects

from the Merger

•   Upon completion of the merger, control of each company will remain unchanged since new shares regarding the merger are not to be issued.

•   POSCO will succeed the rights and obligations of POSCO Energy that is only limited to the division related to the merger.

•   The largest shareholder of POSCO will remain the same.

•   This merger is expected to bring benefits including reducing operation costs and increasing operation efficiency that will ultimately have positive impacts on POSCO’s financial condition.

(1)   Merger Unit Price of POSCO Common Share (listed company)

A:   Weighted average price of recent 1 month (March 12~April 11, 2019) : KRW 262,519

B: Weighted average price of recent 1 week (April 5~April 11, 2019): KRW 272,928

C: Price of recent date (April 11, 2019): KRW 269,500

Merger Unit Price [(A + B + C) / 3]: KRW 268,316

(2)   Merger Unit Price of POSCO Energy Common Share (unlisted company)

A:   Intrinsic value [(a × 1 + b ×1.5) ÷ 2.5]: KRW 30,745

a.   Value of Asset: KRW 22,680

b.  Value of Profitability: KRW 36,121

B: Relative value: N/A

Merger Unit Price: KRW 30,745

Category and Number of Issuing new shares

for Merger

Other information

for investors

•   In accordance with Article 527-3 of KCA, this small-scale merger will be approved by the Board of Directors of POSCO and will not be voted at the general meeting of shareholders.

•   The timeline of merger may be adjusted.

•   The merger shall not be effected if shareholders, who own no less than 20 percent of the total number of issued and outstanding shares of the company, give written notice to the company of their dissents to the merger within two weeks after the public merger announcement. In such case, further discussions with the acquired company are necessary to proceed.

•   POSCO will pay POSCO Energy KRW 1,163,692,490,287 on September 2nd, 2019 as a grant for the split-merger.

•   Changes in net assets occurred prior to the date of merger will be reflected on the merger financial statements.

•   The merger will take place only if the LNG terminal business transfer deal between POSCO and POSCO Energy signed on April 16th, 2019, is closed.

•   The merger deal may be halted if any party fails to fulfill obtaining any required government approval prior to the date of merger.

•   The merger contract between POSCO and POSCO Energy shall not come into effect if any reason set forth below occurs prior to the date of merger.

1)  If any party is responsible for the cause of repealing the contract, the party shall not break off the deal unless the other party consents in writing.

A)   Written agreement for the withdrawal of the merger deal between the parties is reached before the date of merger.

B)   If either party breaches the terms and duties of the contract, which may result in adverse effects, and fails to rectify the issues within 30 days after notification in writing.

C)   From the date of signing a contract to the date of merger, if any critical adverse effect occurs or is reasonably expected to occur in financial condition, business performance, or other business situation

D)   If a condition precedent ruled under the Article 12 of the contract is not satisfied

2)  If POSCO Energy’s creditors object to the merger with the total amount of bonds that exceeds KRW 700,000,000,000, POSCO Energy may break off the merger contract effective immediately in writing. In such case, POSCO may not hold POSCO Energy liable despite the terms of the Section 3-B below.

3)  The following actions must be followed when the contract is repealed.

A)   Within 14 days, both parties must destroy or return the provided data at a request by each counterpart.

B)   In case of breaching the terms and duties of the contact, the cancellation of the contract shall not affect the rights to claim for damages and other liabilities.

Company Name

Main Business

Total Asset

Total Liabilities

Total Equity

The timeline may be adjusted.

If you wish to object to above merger, please contact Jayne Whalen at Computershare at +1-201-222-4412 to request an objection form. A completed objection form needs to be faxed to Citibank, N.A., depositary of POSCO, prior to 4:00 p.m. (New York time) on May 10th, 2019 at +1-201-222-4593 (attn.: Jayne Whalen).

/s/ Lim, Seung-Kyu