President Lee: “Even if It Means Taking Flak, the Choice Is to Grow the Pie ... M&A Must Be Revitalized”

[Financial News] In discussions on introducing a mandatory tender offer system on the 13th, President Lee Jae Myung said he favored “growing the pie, even if it means taking flak,” and emphasized promoting corporate mergers and acquisitions (M&A).
At a capital market policy meeting held that day at the Korea Exchange in Yeouido, Seoul, President Lee said that “hostile M&A is the biggest tool for normalizing the market,” adding that M&A needs to become more active to address the undervaluation of the domestic stock market and increase the benefits flowing to shareholders.
Regarding companies where large shareholders’ stakes are high, making competition for control difficult, he said, “We need to promote hostile M&A and break this abnormal structure at least once,” and called for an exhaustive review of whether any systems are blocking it. He also said, “Shouldn’t we consider ways to remove from the market companies that are run excessively like private companies in practice?” and called for a review of listing requirements related to large shareholders’ ownership stakes.
The mandatory tender offer system gives ordinary shareholders the opportunity to sell their shares and share in the control premium when control of a listed company is acquired. The ruling and opposition parties agreed to introduce the system by amending the Capital Markets Act during this regular session. Domestic and foreign asset managers have pointed out that the bill under discussion imposes a purchase obligation based on “50% + 1 share” while requiring the acquirer to buy the large shareholder’s stake first, making it difficult to give ordinary shareholders an equal opportunity to sell.
President Lee asked attendees to raise their hands to indicate their views on whether all shareholders should be given an opportunity to sell or a purchase obligation should be imposed based on “50% + 1 share.” If only some shares were to be purchased, more attendees raised their hands for giving large and minority shareholders the opportunity to sell in proportion to their holdings than for buying the large shareholder’s stake first.
President Lee asked, “If the obligation to make a tender offer for all shares increases the acquirer’s financial burden, wouldn’t minority shareholders lose the opportunity altogether if the M&A itself doesn’t happen?” After checking on the ruling party’s discussions, he said, “I hope it won’t be delayed too much,” adding, “In any case, we have to reach a conclusion.”

[email protected] Seong Seok-woo Reporter