This article was published on June 30, 2025, at 2:22 p.m. on ChosunBiz MoneyMove site.
Private equity fund VIG Partners' acquisition of skin care medical device company VIOL has encountered a setback. While the plan was to publicly offer the remaining shares in addition to the management equity stake (34.76%) and pursue voluntary delisting from the KOSDAQ market, they are faced with demands from minority shareholders to "reassess the public offering price."
Minority shareholders contend that VIOL's corporate value is undervalued. Furthermore, with the fact that DMS, the existing largest shareholder, will remain as an investor in the special purpose corporation (SPC) for VIG Partners' acquisition of VIOL known, they are opposed to a structure where "future corporate value is shared only between the majority shareholder and the private equity fund."
According to the financial investment industry on the 30th, minority shareholders holding equity in VIOL sent a shareholder letter on the 24th titled "Proposal to reassess the public offering price," claiming that the public offering price for VIOL should be raised from the current 12,500 won per share to a maximum of 28,000 won per share.
The shareholder stated, "VIOL is not just a simple high-growth company, but an outstanding corporation with unique profitability and technological capabilities," adding, "The 19% premium applied to the average stock price over the past month falls short of the 30-40% premium applied by past entities like Austem and Lutronic."
VIG Partners previously announced on the 17th that it would acquire the 34.76% equity held by display equipment company DMS and publicly offer a minimum of 12,125,998 shares and a maximum of 37,438,265 shares. They set the public offering price at 12,500 won per share, the same as the acquisition price for the DMS shares.
VIG Partners stated, "The public offering price also provides the same management rights premium to minority shareholders, aligning with the principle of protecting minority shareholder rights," adding, "It will also represent the highest historical price since the company was listed on December 3, 2019, providing all investors participating in the public offering with revenue."
However, minority shareholders argue that VIG Partners' public offering for VIOL shares and the push for delisting represent a maneuver to avoid sharing potential growth benefits with minority shareholders. This is based on the judgment that significant performance improvement is imminent due to recent patent infringement lawsuit victories and accelerated global expansion.
VIOL is a corporation that manufactures skin care medical devices based on radio frequency (RF) energy. As interest in "K-beauty" increases, its performance is improving. In the first quarter of this year, it recorded sales of 16.7 billion won and an operating profit of 10.4 billion won, marking increases of 48% in sales and 59% in operating profit compared to the same period last year.
Last year, VIOL won a preliminary ruling in a patent infringement lawsuit filed with the U.S. International Trade Commission (ITC) and officially recognized its microneedle RF core technology. The market anticipates that VIOL will actively pursue global expansion into the U.S., China, and Brazil this year.
Structural issues are also cited as core points of contention. VIG Partners has explained that the public offering price per share is set equal to the management acquisition price per share, offering minority shareholders the same management rights premium granted to the largest shareholder DMS, but this is not accurate.
In reality, DMS retains its shareholder status even after selling its management equity stake in VIOL to VIG Partners. This is because VIG Partners only acquires 7% of the VIOL shares held by DMS as SPC and structures the remaining 28% as a contribution in kind to the SPC created by VIG Partners. DMS remains the second largest shareholder.
Minority shareholders pointed out, "While VIG Partners takes control of VIOL, DMS also shares considerable benefits from the increase in corporate value," noting that "it may appear to be fair on the surface, but the benefits are only shared between a few major shareholders and the private equity fund, excluding ordinary investors."
VIG Partners plans to accept applications for the public offering until the 7th of next month. The minimum target quantity is set at 12,125,998 shares. If the number of shares applied for in the public offering does not meet the minimum target quantity of 12,125,998 shares, they plan not to purchase any of the offered shares. NH Investment & Securities is the underwriter.
The market is suggesting that if opposition from minority shareholders continues, it may be difficult to achieve delisting. Although current trading volume and stock price trends indicate some acceptance of the public offering, if opposing shareholders retain their shares to the end, the conditions for delisting may not be met.
In the securities industry, there is a high likelihood that VIG Partners will enter negotiations with minority shareholders. To pursue voluntary delisting, they need to secure more than 95% of the total issued shares, as a collective action has been indicated in the shareholder letter. The current government's emphasis on protecting minority shareholder rights is also considered a pressure factor.
A source in the securities industry remarked, "Looking at the public offering alone, it seems that the management rights premium is granted to minority shareholders, but that is not the case," adding, "This may serve as a test of how crucial structural fairness and investor trust are in management acquisition."