Minority shareholders of Tongyang Life Insurance are raising funds to cover litigation expense against Woori Financial Group and preparing a legal response. Woori Financial Group plans to make Tongyang Life Insurance a wholly owned subsidiary through a stock exchange, but Tongyang Life Insurance minority shareholders believe there are problems with how the ratio was calculated. Tongyang Life Insurance minority shareholders have filed a complaint with the Financial Supervisory Service, putting pressure on Woori Financial Group.
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-activism platform "Act" to pursue a lawsuit against Woori Financial Group and Tongyang Life Insurance. They are also pushing a court injunction to block the new share issuance Woori Financial Group is pursuing to deliver to Tongyang Life Insurance shareholders.
Woori Financial Group disclosed that it held a board meeting on the 24th and decided on a comprehensive stock exchange with Tongyang Life Insurance. Woori Financial Group currently holds a 75.34% equity stake in Tongyang Life Insurance. The stock exchange ratio is 0.2521056 share of Woori Financial Group common stock per 1 share of Tongyang Life Insurance. The exchange prices are set at 34,589 won for Woori Financial Group and 8,720 won for Tongyang Life Insurance. The total number of new shares Woori Financial Group will issue for this is 8,696,875, which is 1.19% of the 727,806,728 outstanding shares excluding treasury stock. Woori Financial Group plans to complete the stock exchange on Aug. 11 after an extraordinary shareholders meeting on July 24.
Minority shareholders of Tongyang Life Insurance argue that Tongyang Life Insurance's corporate value was not fully reflected in the process of calculating the stock exchange ratio between Woori Financial Group and Tongyang Life Insurance. They also argue that no external appraisal agency reviewed the exchange ratio calculation process and that during the valuation period Woori Financial Group boosted its share price through share buybacks and cancellations, resulting in an exchange ratio unfavorable to Tongyang Life Insurance minority shareholders.
Woori Financial Group says the exchange price for the comprehensive stock exchange was calculated under the formula specified by the Financial Investment Services and Capital Markets Act (volume-weighted average prices for the most recent one month and one week and the most recent closing price), and that when a listed company makes another listed company a wholly owned subsidiary, current law does not require advice from an external appraisal agency. Woori Financial Group also said that since 2023 it has periodically conducted treasury share acquisitions and cancellations to enhance shareholder value and has now halted those activities.
Woori Financial Group and Tongyang Life Insurance each held a meeting for shareholders on the 6th to explain the background and procedures of the comprehensive stock exchange and to win support. 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 demanding an extraordinary shareholders meeting, by pooling more than 3% of their equity through Act. They are also proceeding to elect a shareholder representative.
A Woori Financial Group official said, "We see little risk, as the push for the stock exchange is taking place within the legal framework."