[Edaily Reporter Kim Kyung-eun ] On the 20th, activist fund Align Partners Asset Management raised concerns about a potential conflict of interest regarding Macquarie Asset Management’s proposed tender offer for GABIA, Inc.(079940), stating, “This is not a typical third-party merger and acquisition (M&A) but a transaction to transform the company into a closed corporation in which the controlling shareholder retains management control.” Accordingly, it urged GABIA, Inc.’s board of directors to consider a higher price than the tender offer premium proposed by Macquarie and to explore alternative options.

Align Partners issued a statement on the same day, stating, “The public tender offer for GABIA, Inc. must follow a fair process to protect the interests of minority shareholders and maximize value for all shareholders,” and added, “We plan to send an open Seohan to GABIA, Inc.’s board of directors containing these points shortly.”

Under the terms of this tender offer, DCK Investment—a special purpose company (SPC) established by Macquarie—will acquire GABIA, Inc.’s remaining shares at 48,000 won per share and then pursue a voluntary delisting. The tender offer price is 41.6% higher than the closing price on the trading day immediately prior to the filing of the tender offer notice and 56% higher than the average share price over the past month.

Macquarie plans to conduct the tender offer for all remaining shares—excluding those held by the largest shareholder and related parties—to make GABIA, Inc. a wholly-owned subsidiary and subsequently convert it into a privately held company. GABIA, Inc. is believed to have decided to go private in response to increasing pressure from Align, which has been expanding its stake since late last year.

The tender offer prospectus states that major shareholders, including GABIA, Inc. CEO Kim Hong-guk, will sell their holdings, reinvest the proceeds (net of taxes) back into the tender offer, and enter into an agreement with Macquarie to continue participating in management. Both parties have agreed to establish a joint decision-making structure regarding board composition and key management matters following the tender offer.

In response, Align pointed out, “Although this appears to be a third-party tender offer on the surface, it is essentially a transaction to transform the company into a closed corporation where the controlling shareholder retains management control,” adding, “There are greater concerns about structural conflicts of interest than in typical third-party M&A deals.”

It further emphasized, “Under the revised Commercial Act, the board of directors must not merely review the appropriateness of the offered price but must actively explore alternatives that could offer a higher price or more favorable terms in the best interests of all shareholders,” adding, “The tender offer price cannot be considered the maximum value shareholders can obtain simply because it carries a certain premium over the market price.”

Align is a major shareholder holding a 14.3% stake in GABIA, Inc. Align has long argued that GABIA, Inc.’s corporate value has been undervalued due to its dual-listing structure—in which it holds listed subsidiaries such as KINX—and has called for improvements to the corporate governance structure.

Lee Chang-hwan, CEO of Align, stated, “This transaction is a move toward a closed-company structure in which the CEO and controlling shareholder, through reinvestment, will continue to jointly control and manage the company alongside Macquarie PE.” He added, “In a transaction raising significant concerns about structural conflicts of interest, the board of directors has a duty to verify whether a higher price or a more favorable alternative exists in order to maximize shareholder value.”

Align has demanded that GABIA, Inc.’s board of directors publicly disclose its official position on the matter by the 31st. The company has indicated that if a satisfactory response is not provided, it will consider follow-up measures available under the Commercial Act and the Capital Markets Act.

The public Seohan demands that GABIA, Inc.’s board of directors publicly explain to all shareholders whether it: △ actively sought out potential acquirers who could offer more favorable terms; △ independently verified the fairness of the tender offer price; △ formed an independent special committee to decide whether to issue an opinion on the tender offer and, if so, the content of that opinion; and △ ensured that the process of providing information to the acquirer and the management of conflicts of interest were conducted lawfully and fairly.