As the plan to merge the Korea SMEs & Startups Distribution & Marketing Agency (Hanyuwon) and Gongyoung Home Shopping under the tentative name "Small and Medium Enterprise Marketing Promotion Corporation" moves forward, attention is focusing on the specific method of integration. How to adjust the interests of NongHyup Economic Holdings and the National Federation of Fisheries Cooperatives, which together hold half of Gongyoung Home Shopping's equity, is seen as a key issue.
According to the public institution function reform plan the government released on the 3rd, Hanyuwon and Gongyoung Home Shopping will be merged into the "Small and Medium Enterprise Marketing Promotion Corporation." The policy is to bring together market access support functions such as identifying and consulting on small and midsize enterprise products, and operating TV and online sales channels, and to bundle them into a single support system from product discovery to onboarding, sales, and performance management.
Hanyuwon is 100% owned by the Korea SMEs and Startups Agency (KOSME). The equity of Gongyoung Home Shopping consists of 50% Hanyuwon, 45% NongHyup Economic Holdings, and 5% the National Federation of Fisheries Cooperatives.
Given the equity structure, an absorption merger that keeps Hanyuwon, the largest shareholder of Gongyoung Home Shopping, as the surviving entity is being discussed as a likely option. If a stock exchange method is chosen, the Gongyoung Home Shopping shares held by NongHyup Economic Holdings and the National Federation of Fisheries Cooperatives will be converted into new shares of the integrated corporation, and KOSME, NongHyup Economic Holdings, and the National Federation of Fisheries Cooperatives will become shareholders of the integrated corporation. The equity ratios will be newly set according to the merger ratio that reflects the corporate value of the two organizations.
Even if the Gongyoung Home Shopping corporation is dissolved, the integrated corporation can succeed to the status of a home shopping broadcaster after obtaining regulatory approval for the change. Applying the existing approval conditions to the integrated corporation is also expected to be reviewed together.
However, the prevailing view is that NongHyup Economic Holdings and the National Federation of Fisheries Cooperatives have little incentive to continue holding a minority equity stake in the integrated corporation. Currently, through their equity in Gongyoung Home Shopping, they can exert influence over sales channels for agricultural, livestock, and fishery products, but after integration their equity ratios and management influence could decline. Because it is not easy to dispose of or utilize unlisted equity with a strong public-institution character, they may seek cash settlement or a pre-merger equity sale instead of receiving new shares of the integrated corporation.
Having Gongyoung Home Shopping absorb Hanyuwon is also one of the options. A Gongyoung Home Shopping–centered merger is advantageous for business continuity because it can maintain existing operating contracts with the broadcasting entity. However, if Gongyoung Home Shopping absorbs Hanyuwon, the 50% equity in Gongyoung Home Shopping held by Hanyuwon becomes treasury stock. Under the amended Commercial Act, that equity must be retired within one year. There would then be the burden of redesigning the equity ratios and the governance structure of the integrated corporation.
It is also possible to establish the Small and Medium Enterprise Marketing Promotion Corporation as a separate entity by integrating and newly setting up the two organizations. While the functions and organizations of the two entities could be reorganized within a new framework, many procedures must be completed—such as enacting or revising laws, asset and liability transfer, employment succession, and approval for changes to the broadcasting business—so it is expected to take considerable time to complete the integration.
It is reported that stakeholders, including Hanyuwon and Gongyoung Home Shopping, have not been informed of the integration plan. Multiple officials said, "There is nothing the Ministry of SMEs and Startups has conveyed about how the integration will proceed." They added, "This plan appears to be one in which the Ministry of Economy and Finance announced first and the detailed measures will follow," and "NongHyup Economic Holdings and the National Federation of Fisheries Cooperatives also seem likely to decide whether to continue holding equity, or how to unwind it, after a concrete plan emerges."