The small shareholder activism platform "aCT" has targeted Hyundai Futurenet, a digital media subsidiary of Hyundai Department Store Group. They are concerned that the merger ratio in the process of merging Hyundai Futurenet into Hyundai Home Shopping will be unfavorable for ordinary shareholders.
aCT is a mobile application that consolidates ordinary shareholders' equity and uses it to monitor the major shareholders at shareholder meetings.
As of the 21st, aCT collected 5,564,847 shares of Hyundai Futurenet from 302 authenticated shareholders, representing 5.04% of equity, amounting to 19.2 billion won. With the possibility of a merger with Hyundai Home Shopping rising, shareholders are coming together to oppose it.
The scenario of the merger between Hyundai Futurenet and Hyundai Home Shopping emerged as Hyundai Department Store Group, which declared its transition to a holding company system in 2023, needs to comply with equity regulations.
Hyundai Department Store Group has a shareholding structure that consists of Hyundai G.F Holdings → Hyundai Home Shopping (subsidiary) → Hyundai Futurenet (grandchild company) → Hyundai Bioland (great-grandchild company). According to fair trading law, holding companies must own 30% of their subsidiaries' equity, while subsidiaries must own 30% of their grandchild companies, and grandchild companies must own 100% of their great-grandchild companies. However, Hyundai Futurenet currently owns only 35% of Hyundai Bioland. To maintain the current structure, Hyundai Futurenet must acquire an additional 65% of Hyundai Bioland's equity.
However, if Hyundai Futurenet merges with Hyundai Home Shopping, the issue is easily resolved. The subsidiary (the merged entity of Hyundai Home Shopping and Hyundai Futurenet) only needs to hold 30% of the equity of Hyundai Bioland, which is now a grandchild company. Since Hyundai Futurenet already holds 35%, there is no need to purchase additional shares of Hyundai Bioland.
Hyundai Department Store Group has stated that the deadline for complying with equity-related regulations has been extended from the 1st of next month to March 2027, but shareholders believe there is a high possibility that the merger between Hyundai Futurenet and Hyundai Home Shopping will proceed within the extension period.
aCT noted, "Small shareholders will continuously monitor the fairness of the merger ratio and the post-merger compensation system while actively engaging in shareholder activism."
Hyundai Department Store Group stated, "We do not plan any restructuring related to the merger, public offering, or delisting concerning Hyundai Futurenet."
With a growing role of shareholder activism in the stock market, aCT appears to be exerting significant influence on the decision-making of listed companies. In the past, small shareholders had to obtain shareholder lists from companies to directly meet and persuade other shareholders to voice their opinions. Typically, companies would not provide the shareholder list unless there was a lawsuit, and even if they did, the physical burden was considerable.
However, aCT has utilized its platform to encourage shareholders to gather voluntarily. The authentication process allows small shareholders to easily collect voting rights.
A representative case is the shareholder activism against Emart. Last January, aCT conducted the "Value-Up Emart" campaign, highlighting that Emart's price-to-book ratio (PBR) was significantly low at 0.16 compared to the market average of 0.95.
Criticism was also directed at Chung Yong-jin, chairman of Shinsegae Group, for ineffective and extensive management. This includes the case of Jeju Soju, which was acquired in 2016, posting a deficit of 43.4 billion won for four years before being sold to OB Beer, and the case of Pierrot Shopping, which was benchmarked against Don Quijote but closed down just a year and a half later. Additionally, the acquisitions of the baseball team (SSG Landers) and winery (Shinsegae L&B) were pointed out as lacking considerations for synergy with the main business.
With the equity gathered through the campaign, aCT sent a letter to Emart. They requested the complete disposal of treasury shares, the introduction of cumulative voting systems, reporting and approval of executive compensation policies at general meetings, and allowing advisory shareholder proposals. This month, Emart announced its plan to enhance corporate value, stating it would retire half of its treasury shares, reflecting some of the content in aCT's shareholder letter.
aCT also led efforts to withdraw ISU PETASYS's decision to acquire Jeio, a secondary battery company. In November last year, ISU PETASYS announced a paid-in capital increase of 550 billion won for the acquisition of Jeio. Shareholders protested, arguing that there was little relevance between the semiconductor and secondary battery businesses, and aCT gathered 5.56% (3,507,727 shares) of ISU PETASYS's equity through its platform and sent a letter of appeal to the company.
After confirming the shareholders' intentions, the Financial Supervisory Service (FSS) also intervened in ISU PETASYS's capital increase. To proceed with the paid-in capital increase, they must submit a securities report to the financial authorities for approval, and the FSS ordered ISU PETASYS to rewrite the securities report. Ultimately, ISU PETASYS withdrew its acquisition plan for Jeio.
However, they insisted on the need for facility funds, proceeding with a paid-in capital increase of 250 billion won. The securities report for this paid-in capital increase is currently under review by the FSS.
In addition, aCT has small shareholders of T'way Air (3.47%, 7,483,877 shares), which is in negotiations regarding management rights between Daemyung Sono and the largest shareholder YeaRimDang, and Oscotec (14.3%, 5,470,674 shares), which has been controversial due to the split listing of its subsidiary "Genosco."
Lee Sang-mok, CEO of aCT, stated, "In the last 2-3 years, awareness of shareholder value and rights has significantly increased," adding, "As we enter the general meeting season, shareholder actions through the platform are becoming more active, and we plan to develop features like electronic proxies to further encourage small shareholder activities."