Some minority shareholders of Tongyang Life Insurance are raising funds for litigation expenses against Woori Financial Group and preparing a legal response. Woori Financial plans to exchange shares with Tongyang Life Insurance and make it a wholly owned subsidiary, but Tongyang Life Insurance minority shareholders believe there is a problem with how the ratio was calculated. Tongyang Life Insurance shareholders have filed a complaint with the Financial Supervisory Service and are raising objections with Woori Financial.
According to the financial industry on the 19th, about 20 minority shareholders of Tongyang Life Insurance recently raised about 10 million won through the shareholder action platform "Act" to pursue a lawsuit against Woori Financial and Tongyang Life Insurance. They are also pushing for a court injunction to block the new share issuance that Woori Financial is pursuing for the purpose of delivering shares to Tongyang Life Insurance shareholders.
Woori Financial disclosed that it held a board meeting on the 24th of last month and decided on a comprehensive exchange of shares with Tongyang Life Insurance. Woori Financial's equity stake in Tongyang Life Insurance is currently 75.34%. The share exchange ratio is 0.2521056 shares of Woori Financial Group common stock for each share of Tongyang Life Insurance. The exchange price was set at 34,589 won for Woori Financial and 8,720 won for Tongyang Life Insurance.
To that end, the total number of new shares to be issued is 8,696,875, equivalent to 1.19% of the 727,806,728 shares outstanding excluding treasury shares. Woori Financial plans to hold a board meeting on July 24, and Tongyang Life Insurance plans to hold an extraordinary general meeting of shareholders, with the share exchange to be completed on Aug. 11.
Minority shareholders of Tongyang Life Insurance argue that Tongyang Life Insurance's corporate value was not adequately reflected in the process of calculating the share exchange ratio between Woori Financial and Tongyang Life Insurance. They also argue that no review by an external appraisal agency took place during the calculation process, and that during the reference period for the calculation, Woori Financial supported its share price through treasury share buybacks and cancellations, resulting in an exchange ratio unfavorable to Tongyang Life Insurance minority shareholders.
Woori Financial said the exchange price for the comprehensive share exchange was calculated according to the formula specified by the Financial Investment Services and Capital Markets Act (based on the volume-weighted average price for the most recent one month and one week, and the most recent closing price), and that while advice from an external appraisal agency is not mandatory under current law, it recorded the relevant details in the securities registration statement after a review by Samil Accounting Corporation to strengthen fairness. Woori Financial also said that since 2023 it has periodically acquired and canceled treasury shares to enhance shareholder value, and that this is currently on hold.
Woori Financial and Tongyang Life Insurance each held a meeting for shareholders on the 6th to explain the background and procedures of the comprehensive share exchange and to persuade them. Woori Financial emphasized the tangible benefits minority shareholders would gain after the share exchange, such as a high dividend yield.
However, some minority shareholders are pushing back and planning collective action. Tongyang Life Insurance minority shareholders recently met the threshold to exercise minority shareholder rights under the Commercial Act, such as requesting an extraordinary general meeting, by gathering more than a 3% equity stake through Act. They are also proceeding to elect shareholder representatives.
A Woori Financial official said, "The share exchange initiative proceeded in accordance with due process, and we also implemented additional measures to strengthen fairness, including a review from the perspective of protecting minority shareholders through a special committee."