CJ ENM, the largest shareholder of Tving, confirmed on the 30th that it has applied for a 'corporate combination review' involving executive concurrent positions between Tving and Wavve with the Fair Trade Commission.
Recently, CJ ENM has embarked on strategic investments, including acquiring convertible bonds (CB) worth 100 billion won to facilitate the business combination of Tving and Wavve. It is interpreted that CJ ENM expressed its intention to accelerate the merger by dispatching its executives to Wavve as a follow-up measure.
Tving is the second-largest online video service (OTT) provider in South Korea, while Wavve ranks fourth. As of October, the combined monthly active users (MAU) of Tving (approximately 8.09 million) and Wavve (approximately 4.2 million) total 12.29 million, surpassing the number of the top OTT player, Netflix (approximately 11.9 million).
The Fair Trade Commission's review of corporate combinations includes five forms: stock acquisition, executive concurrent positions, mergers, transfers of business operations, and participation in the establishment of new corporations.
An industry insider said, 'If the Fair Trade Commission approves the corporate combination review of the executive concurrent positions between Tving and Wavve, the CEO of Wavve could also be sent from CJ.' They added, 'If the consent of other shareholders is obtained during the review of the executive concurrent positions by the Fair Trade Commission, it could also transition into a corporate combination review for the merger.'
There is an analysis that the executive concurrent positions between the two companies may act as a catalyst for the merger as the merger is currently delayed. The fact that the impact of executive concurrent positions on the market is relatively minor compared to a merger may also lead to a shorter review period by the Fair Trade Commission.
In December last year, CJ ENM, the largest shareholder of Tving, and SK Square, the largest shareholder of Wavve, exchanged a memorandum of understanding (MOU) for the merger of Tving and Wavve. However, the main shareholder of Tving, KT, did not give its consent, preventing the signing of the main merger contract. It is reported that KT has not agreed to the merger due to concerns about destabilizing its position as the top paid broadcasting service provider.
In general, if more than two-thirds of the voting rights of shareholders are secured, a merger can be completed; however, KT, the main shareholder of Tving, is known to have specific contractual consent rights. In 2022, when Tving merged with KT's OTT 'Season,' there was a condition requiring KT's consent for any future changes to the contract terms because a merger constitutes a significant change in those terms.
However, a corporate combination in the form of executive concurrent positions only requires a majority of shareholder votes. Thus, the consent of other major shareholders, including CJ ENM (Tving) and SK Square (Wavve), is sufficient without KT's consent.
CJ ENM holds 49% of Tving's equity, while KT's subsidiary, KT Studio Genie, holds 13.5%. Other major shareholders include Zen Partners & Company with 13.5%, SL Central with 12.7%, and Naver with 10.7%. SK Square holds 40.5% of Wavve's equity, while the remaining three terrestrial networks, KBS, MBC, and SBS, each hold 19.8%.
A CJ ENM official said, 'We have applied for a corporate combination review regarding executive concurrent positions,' and added, 'We will continue to discuss various collaboration plans with Wavve to strengthen our competitiveness in the OTT business.'
A KT official noted, 'We are comprehensively reviewing not only the impact on the overall paid broadcasting market in South Korea but also the effects on the strategic partnership between KT Group and Tving.'