Emart failed to secure the target equity in a tender offer aimed at delisting Shinsegae Food because the number of shares tendered fell short.
According to the Financial Supervisory Service's electronic disclosure system on Jan. 7, Emart carried out a tender offer for Shinsegae Food from Dec. 15 last year to on the 5th. A total of 425,206 shares were tendered, about 29% of the planned purchase volume of 1,467,319 shares.
To delist, it must meet the requirement for a wholly owned subsidiary of at least 95% equity. Before this tender offer, Emart held 2,148,133 shares (55.47%) of Shinsegae Food. Through this tender offer, it increased its equity to 2,573,339 shares (66.45%). Including 257,029 treasury shares (6.64%) held by Shinsegae Food, Emart's effective equity stake is only about 73.10%.
This is interpreted as the result of pushback from some minority shareholders, even though the tender offer price was set at 48,120 won, 20% higher than the previous trading day's closing price. The tender price came to just 0.59 times Shinsegae Food's price-to-book ratio (PBR), a level that falls short of even half of book value, which was seen as a drag.
As a result, the market expects Emart to purchase additional equity through a comprehensive exchange of shares rather than launching another tender offer. A comprehensive exchange of shares is a procedure stipulated in the Commercial Act. It can be carried out in a form where a subsidiary's shareholders transfer the shares they hold to the parent company and receive cash in return.