Woori Financial Group plans to appoint an additional accounting firm to reexamine the stock exchange ratio with Tongyang Life Insurance. Woori Financial Group is pursuing full conversion of Tongyang Life Insurance into a wholly owned subsidiary through a stock exchange. Initially, Woori Financial Group calculated the stock exchange ratio for both itself and Tongyang Life Insurance through Samil Accounting Firm. However, the Financial Supervisory Service reportedly determined that having the accounting firm appointed by Woori Financial Group evaluate the stock exchange ratio for both sides does not align with the intent of the amended Commercial Act, and requested the appointment of an additional accounting firm.
According to the financial industry on the 15th, Tongyang Life Insurance plans to inform about the plan to reexamine the stock exchange ratio at a shareholder meeting with Woori Financial Group on the 22nd. After Tongyang Life Insurance additionally appoints an external accounting firm, Woori Financial Group and Tongyang Life Insurance will each have the exchange ratio calculated by different accounting firms.
Initially, Woori Financial Group calculated the exchange price for this comprehensive stock exchange according to the formula designated by the Financial Investment Services and Capital Markets Act (volume-weighted average price for the most recent one month and one week and the most recent closing price). After determining the exchange ratio accordingly, it underwent a review by Samil Accounting Firm to strengthen fairness.
However, the Financial Supervisory Service on the 26th requested a correction to the securities registration statement submitted by Woori Financial Group and suspended its effectiveness. Along with this, it reportedly recommended that the stock exchange ratio be reassessed.
In February, the Ministry of Justice announced guidelines related to the first amendment to the Commercial Act, centered on expanding directors' duty of loyalty to include enhancing shareholder value. The guidelines recommend that, when proceeding with mergers between affiliates, multiple advisory institutions be appointed and that the board's opinion letter specifically describe the matters considered related to the merger.
The guidelines are not legally binding norms. However, it has been conveyed that the Financial Supervisory Service judged the process by which Woori Financial Group calculated the exchange ratio through only Samil Accounting Firm to be inconsistent with the intent of the guidelines.
Minority shareholders of Tongyang Life Insurance are also taking issue with the stock exchange ratio. They argue that the review by an external evaluation institution was not properly conducted during the exchange ratio calculation process, and that during the reference period for the calculation, Woori Financial Group supported its share price through share buybacks and cancellations, resulting in an exchange ratio set to the disadvantage of Tongyang Life Insurance minority shareholders.
On Apr. 24, Woori Financial Group disclosed that its board of directors decided on a comprehensive exchange of shares with Tongyang Life Insurance. Woori Financial Group's equity stake in Tongyang Life Insurance is currently 75.34%, and the stock exchange ratio is 0.2521056 shares of Woori Financial Group common stock per one share of Tongyang Life Insurance. The exchange prices were set at 34,589 won for Woori Financial Group and 8,720 won for Tongyang Life Insurance.
For this, the total number of new shares to be issued by Woori Financial Group is 8,696,875, which is 1.19% of the 727,806,728 outstanding shares excluding treasury shares. Woori Financial Group plans to hold a board meeting on Jul. 24, and Tongyang Life Insurance plans to complete the stock exchange on Aug. 11 after an extraordinary shareholders meeting.
A Tongyang Life Insurance official said, "Although the detailed agenda of the meeting has not been finalized, it appears that the revaluation of the stock exchange ratio will be the main topic."