Gabia Tender Offer Falls Through as Macquarie Acquisition Stalls

Macquarie Asset Management’s tender offer for Gabia fell through after failing to meet the minimum subscription threshold. According to the Financial Supervisory Service’s electronic disclosure system, Macquarie’s SPC, DCK Investment, conducted the 60-day tender offer for Gabia common shares from July 20 to September 17. The tender offer price was KRW 48,000 per share, and the intended purchase range was from a minimum of 3,267,629 shares to a maximum of 9,805,505 shares.

The transaction was structured to close only if subscriptions exceeded the minimum volume, with a condition that if fewer than 3,267,629 shares were tendered, none of the tendered shares would be purchased. However, final subscriptions came to only 721,413 shares, or 22.1% of the minimum threshold. As a result, DCK Investment acquired 0 shares in practice, and both the acquisition plan and the plan for voluntary delisting were thrown off track.

Questions also remain after the tender offer ended. The follow-on issues are the handling of the share purchase agreement, or SPA, with the existing controlling shareholder side and the reorganization of the board through an extraordinary general meeting of shareholders.

Macquarie had initially planned to combine the acquisition of shares from the existing controlling shareholder side with a tender offer for general shareholders. Its goal was to secure Gabia shares, fold the company into a wholly owned subsidiary, and pursue voluntary delisting.

But with the tender offer failing to go through, a revision of the original deal structure has become unavoidable. The overall transaction structure Macquarie had sought to pursue by combining the controlling shareholder stake acquisition and the tender offer now also needs to be reconsidered.

Macquarie has already signed an SPA with Kim Hong-guk, co-CEO, and others on the existing controlling shareholder side. However, the SPA is affected by the tender offer results, and completion of the tender offer is included as one of the conditions precedent to the transaction.

Accordingly, attention now centers on whether the agreement will be maintained. Another key question is whether the parties will readjust the terms and then move to reinitiate the transaction.

Align Partners stated its position after the tender offer results were announced on the 18th. Align Partners said transaction terms acceptable to general shareholders are necessary, explaining that a deal cannot be guaranteed solely by the consent of controlling shareholders and that it is important to establish fair terms that general shareholders can accept.

Align said the essence of the Gabia campaign is to address undervaluation caused by double listing and the damage to general shareholders. It said that while this process may weaken the influence of a particular controlling shareholder, it opposes rejecting efforts to enhance corporate value for all shareholders simply because of the possibility of weakened control.

Align Partners said there is nothing wrong with management pushing ahead with voluntary delisting. It added, however, that its concern lies not in the delisting itself but in the difference in economic position between the controlling shareholder and general shareholders after the transaction.

Align Partners said existing management could continue to participate in management through a reinvestment after selling shares and could retain future upside. By contrast, general shareholders would receive cash and have their investment relationship fully terminated if they accepted the tender offer. Align Partners said this transaction structure, in which management can retain participation in management through reinvestment and future upside while general shareholders see their investment relationship end completely after receiving cash, raises concerns about structural conflicts of interest.

Align Partners said that if voluntary delisting is pursued again in the future, improved terms will be necessary. Its point was that conditions protecting general shareholders should be raised compared with the previous attempt if voluntary delisting is relaunched.

Align Partners said that if voluntary delisting is pursued again, it is necessary to secure better terms than before for Gabia general shareholders, whose investment relationship ends once they receive cash.

Align Partners said that, given the double-listing structure, it is also necessary to prepare in parallel a solution that protects the interests of general shareholders in other listed subsidiaries and grandchildren companies such as KINX.

After the tender offer ended, the focal points in discussions about Gabia shifted to SPA handling and board composition. In the process, Align Partners called for stronger board independence.

Align Partners requested the convening of an extraordinary general meeting and is seeking to expand the board and appoint recommended directors. Ahead of the tender offer’s end, an Align-recommended independent director resigned. As a result, the board lineup changed ahead of the extraordinary shareholders' meeting scheduled for October.

Align Partners requested the extraordinary general meeting to address the board independence issues that surfaced during this campaign and tender offer process and to protect general shareholder interests. Its proposal includes the additional appointment of two independent directors and one non-executive director.

Meanwhile, debate over Gabia is expected to center on the tender offer price and control of the board. Concerns were also raised that discussion of the company’s business competitiveness and corporate value could be pushed to the background. Gabia has expanded its business from domain names and hosting into IDC and cloud services, and more recently has broadened its scope into AI infrastructure around the Gwacheon data center.

Accordingly, the tasks ahead are seen as protecting general shareholders and resolving governance issues. Another task is linking capabilities in data centers, cloud, and AI infrastructure to growth and higher corporate value. The essence of the Gabia discussion is expected to focus less on the direction of management control and more on how to strengthen the company’s competitiveness and share the results with all shareholders.

Source: TECHWORLD · Kim Seung-ki
Original: https://www.epnc.co.kr/news/articleView.html?idxno=407175

References

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