"We oppose a fire sale. A sale is not a matter to be approached as part of tidying up a particular shareholder's portfolio." (ONE store labor union)
"In an instant, the company I work for is changing from a flagship SK Group affiliate in Korea to a KOSDAQ corporations with tight finances. It's a bolt from the blue." (ONE store employee A)
ONE store is a subsidiary of SK Group's intermediate holding company SK Square, and is Korea's homegrown app market launched in 2016 by the three mobile carriers and Naver. Its market share has not been large in an app market dominated by Google and Apple, but it has had symbolic significance. However, since its launch, ONE store has never recorded an operating profit in the black. Fundraising, growth, and an initial public offering (IPO) all proved difficult, and it eventually became SK Square's sore spot. Then, on the afternoon of the 18th, Nexus, a KOSDAQ corporations led by CEO Jang Hyun-kuk, formerly the CEO of Wemade, announced it would acquire 89.03% of ONE store's shares for 62.62703 billion won. It will take over the equity of SK Square (45.78%), Naver (24.06%), Steel Number One First (17.02%), and Krafton (2.17%). Nexus barely turned operating profit to black last year, but its finances are not sound. ONE store employees have been unable to hide their dismay.
The ONE store union belatedly learned of the plan to sell the company early this month. Employees hastily formed a union to block the sale. About 141 of ONE store's 175 employees have now joined the union. In a statement on the 8th, the union said it "cannot accept a sale that damages ONE store's value," and on the 16th it held a rally, saying it "opposes a fire sale and a slapdash sale."
According to the industry on the 23rd, the ONE store union recently reached an agreement with the company on job security, working conditions, maintaining benefits, and the payment of consolation money. The two sides signed a "job security agreement" to maintain current employment terms before the sale. The consolation money will be the same amount regardless of rank. The final deal was approved by 92% of union members. However, the prevailing view is that this was consent out of necessity. An internal source said, "There is regret that we didn't learn sooner about SK Square's equity sale. But in reality, there was no practical legal way to block a controlling shareholder from transferring shares," adding, "The union was hastily formed two weeks ago, and it concluded that reaching the current agreement was the best course."
Employees see this transaction as a bolt from the blue because of Nexus's financial condition and the deal structure. Nexus announced it would acquire 89% of ONE store's equity for 62.62703 billion won, an amount equal to about 85% of Nexus's total assets and 164% relative to its equity capital. The market largely views this as financially overreaching. The fact that Nexus hit the lower price limit during trading the day after the announcement underscores that view.
What is more striking is that to raise the acquisition funds, Nexus will issue new shares (36.4 billion won) and convertible bonds (21.2 billion won), with the new share allocation going to existing major shareholders who sold ONE store—SK Square, Naver, and Krafton. It is like trying to remove a tumor and attaching one instead. Why did this transaction happen? The industry sees SK Square's main goal as relinquishing the title of controlling shareholder with management rights and boosting its corporations value, rather than focusing on sale proceeds.
In its early days, ONE store took an aggressive stance by offering a 20% commission against Apple and Google's roughly 30%. Starting in 2022, it pushed in earnest to list. But in the book-building, the offering price fell below the amount promised by financial investors (FI), forcing it to withdraw the listing. When it was preparing to list, SK Square expected a corporations value of 1 trillion won for ONE store, but it is now assessed at less than 70 billion won.
From SK Square's perspective, holding management control of loss-making ONE store was a burden. For SK Square, ONE store was an asset that symbolized its early vision as a "platform investment company," but it ultimately became something to divest. If SK Square remained ONE store's largest shareholder, the loss would be reflected in consolidation results, which would not be favorable when SK Square's corporations value is assessed going forward. Prospects are not strong, and a listing also looks unlikely. Lee Kyung-joon, head of investments at Aeall Asset Management, said, "In a situation where SK Square found it difficult to locate a company willing to acquire ONE store, it proceeded with a sale in which it would relinquish controlling shareholder status even if it had to participate in a rights issue," adding, "In theory, liquidation was also possible, but as a large corporate affiliate that was not easy, and it found a buyer."
This transaction is said to have been led by SK Square and Nexus. At SK Square, Song Jae-seung, chief investment officer (CIO) of the Strategic Investment Center (SIC), is said to have taken the lead. Other major shareholders, Naver and Krafton, are also reported to have agreed with the controlling shareholder's view and decided to participate in the rights issue.
Of course, another reason existing ONE store shareholders are participating in Nexus's rights issue is the hope of reviving ONE store. Explaining the background of the acquisition, CEO Jang Hyun-kuk said, "Acquiring ONE store is the final piece to complete the gaming platform with AI and Blockchain," adding, "In the global market, there is virtually a gap for a web3 game-dedicated store, so we believe we can position ONE store as a web3 game store and pioneer a new market."
A Nexus official said, "For existing ONE store employees, job succession and treatment will proceed the same," adding, "We plan to change Nexus's existing brand 'Cross' to 'One,' just like ONE store." An SK Square official said, "We will continue a strategy of selection and concentration centered on the AI Semiconductor portfolio, and we expect business synergy between ONE store and Nexus."