A dispute is unfolding over the tender offer by cloud-specialized corporations Gabia(079940). Activist fund Align Partners Asset Management said, "It cannot be said that Gabia's tender offer price is the maximum value that all shareholders can obtain," and sent a shareholder letter to Gabia's board of directors.
In response, Macquarie Asset Management Group said on the 24th that Gabia's tender offer price was calculated based on global digital infrastructure investment experience and various valuations.
Previously, Macquarie Asset Management agreed to secure the 24.4% equity held by Chief Executive Kim Hong-guk's side through a stock purchase agreement (SPA) while simultaneously tendering to buy 9,805,505 common shares of Gabia at 48,000 won per share via the special purpose investment company DCK Investment. After the tender offer, Macquarie Asset Management plans to make Gabia a wholly owned subsidiary through a voluntary delisting.
Accordingly, Align Partners, the third-largest shareholder holding 14.29% equity in Gabia, sent an open shareholder letter to Gabia's board of directors, requesting that it publicly explain to all shareholders whether it: ▲ actively searched for potential acquirers that could propose more favorable terms (market check or go-shop), ▲ independently verified the fairness of the tender offer price, ▲ formed an independent special committee to decide whether to express an opinion on the tender offer and its contents, and ▲ ensured that the process of providing information to the buyer and managing conflicts of interest was lawful and fair.
Align Partners said, "This transaction outwardly appears to be a tender offer conducted by a third party for all remaining free-floating shares, but in reality, the largest shareholder reinvests the sale proceeds net of taxes and continues to maintain management control together with Macquarie PE going forward," adding, "In substance, it corresponds to a going private transaction by the controlling shareholder, raising significant structural conflict-of-interest concerns, and requires even more stringent procedures to protect the interests of general shareholders than in ordinary third-party mergers and acquisitions (M&A)."
It added, "The mere fact that a certain premium has been added to market prices does not mean that the tender offer price is the maximum value that all shareholders can obtain," and said, "The board should not simply accept the price proposed by the buyer as is, but should confirm whether there are other alternatives that could offer a higher price or more favorable terms, and transparently provide the results to all shareholders so that shareholders can make judgments based on sufficient information."
In response, Macquarie Asset Management rebutted the undervaluation controversy. Distributing an explanatory document that day, Macquarie Asset Management said, "The tender offer price of 48,000 won was determined by comprehensively considering historical share prices, premiums in comparable tender offer cases, peer valuations, past tender offer prices, and the stock purchase agreement (SPA) price."
It also explained that the set price reflects a premium of 41.6% over the closing price immediately before the tender offer and 56.0% over the one-month average share price immediately before, saying, "This is a price that provides all shareholders with a meaningful premium and a definitive liquidity opportunity."
Macquarie Asset Management also pointed out that the valuation method for Gabia's subsidiary KINX cited by Align Partners overstates the corporate value.
Macquarie Asset Management said, "Applying a multiple of about more than 20 times to the expected earnings before interest, taxes, depreciation and amortization (EBITDA) of the Gwacheon data center diverges from global M&A peers or comparable transaction cases."
It also explained that the fair tender offer price of 66,200 won proposed by Miry Capital contains errors in the calculation of consolidated EBITDA and noncontrolling interests.
Macquarie Asset Management said, "We understand that there may be various opinions regarding the fairness of the tender offer price," and added, "We are faithfully complying with relevant laws and procedures and respect the company's independent and fair review process."
Regarding Macquarie Asset Management's position, Align Partners said the valuation it cited as grounds for rebuttal was the analysis presented in its prior shareholder letter, adding, "It was meant to explain the issue of Gabia's corporate value being discounted in the market due to a 'dual-listing'-type structure, and was not intended to evaluate the fairness of the tender offer price or to suggest that the price is low."
It continued, "The party raising issues regarding this tender offer is not Macquarie Asset Management or the tender offer terms themselves, but Gabia's board of directors reviewing this transaction," adding, "We are not demanding a specific tender offer price or a predetermined conclusion; rather, this is to confirm through independent and thorough review and market-check procedures whether this transaction is the best choice for all shareholders, and to fully consider the possibility that superior transaction terms may exist."
It added, "Since Macquarie Asset Management has stated that this tender offer price is at a fair level, we believe there will be no objection to the Gabia board pursuing market check or go-shop procedures to confirm, in line with the purpose of the amended Commercial Act and the Ministry of Justice guidelines, whether superior transaction terms exist to maximize the value of all shareholders."