[Edaily Marketin Reporter Hur Jieun ] GABIA, Inc.(079940), an IT infrastructure company that has been under pressure from an activist fund, is selling its management rights to Macquarie Asset Management, a global private equity fund (PEF) manager. Macquarie plans to acquire GABIA, Inc.’s entire stake and pursue a voluntary delisting. However, Align Partners, GABIA, Inc.’s third-largest shareholder, is strongly opposing the move, drawing attention to whether the tender offer will ultimately succeed.

According to the Financial Supervisory Service’s electronic disclosure system on the 21st, DCK Investment, a special purpose company (SPC) of Macquarie Asset Management, signed a share purchase agreement (SPA) to acquire a 24.4% stake (3,270,248 shares) held by GABIA, Inc.’s largest shareholder and related parties at 48,000 won per share. At the same time, Macquarie is conducting a tender offer until September 17 to acquire the remaining 73.1% stake (9,805,505 shares) in GABIA, Inc. at the same price. If the entire remaining stake is acquired, the tender offer alone will cost up to 470.7 billion won, bringing the total deal size to 627.5 billion won.

The key variable in this transaction is whether the tender offer is successful. Macquarie has set the minimum acquisition target for this tender offer at 24.3% of the total issued shares (3,267,629 shares); if the number of shares tendered falls short of this target, both the tender offer and the existing SPA for management control will be terminated. In other words, the success or failure of the tender offer is expected to determine the fate of the entire transaction to acquire management control of GABIA, Inc.

The Stance of the Second-Largest Shareholder and Minority Shareholders Is Key

GABIA, Inc.’s current shareholder structure consists of the largest shareholder and related parties (24.4%), the second-largest shareholder, Miri Capital (The Miri Strategic Fund; 24.2%), the third-largest shareholder, Align Partners Asset Management (14.3%), treasury stock (2.6%), and other minority shareholders (34.6%). Among them, Align is opposing the move, arguing that the controlling shareholder is attempting to delist the company and take it private. Align claims that the tender offer price of 48,000 won is undervalued relative to GABIA, Inc.’s intrinsic value.

However, the general market consensus is that Align’s (14.3%) refusal to participate alone is unlikely to prevent Macquarie from meeting its minimum target acquisition threshold (24.3%). This is because the minimum threshold can be easily met if the second-largest shareholder, Miry Capital (24.2%), or minority shareholders (34.6%) participate in the tender offer. Given that Miry Capital, the second-largest shareholder, acquired its stake in May 2023, it is speculated that it may opt for an exit (return on investment) through the tender offer.

It is also difficult for Align to block the SPA itself through a preliminary injunction. This transaction is a private deal in which existing major shareholders, including CEO Kim Hong-guk, are selling their shares to Macquarie; it involves the sale of existing shares, not the issuance of new shares. This is why it is unlikely to be subject to preliminary injunctions—such as those prohibiting the issuance of new shares—which frequently arise in management control disputes.

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48,000 Won… A Turning Point for the Tender Offer

From Macquarie’s perspective, the success of the tender offer is essential. If Macquarie succeeds in securing even a minimum stake through the tender offer, it will hold a 48.7% stake in GABIA, Inc., including the shares held by the largest shareholder. However, if GABIA, Inc.’s stock price rises above the tender offer price (48,000 won), the likelihood of the tender offer failing increases. This is because small shareholders would lose the incentive to participate in the tender offer.

Tax issues also arise in connection with the tender offer. If a general retail investor participates in the tender offer, they will be subject to a total capital gains tax of 22%—comprising 20% on the capital gain and 2% local income tax. In addition, since the transaction is considered an over-the-counter (OTC) trade, a securities transaction tax of 0.35% of the transaction amount is applied. On the other hand, if shares are sold on the exchange, individual investors who are not major shareholders are exempt from capital gains tax, and the securities transaction tax is lower, at 0.20% (based on KOSDAQ standards).

GABIA, Inc.’s stock price shot straight to the daily price limit after news of the management control sale broke the previous day. It rose as high as 47,550 won during today’s trading session, bringing the share price to just shy of the tender offer price. Whether the tender offer succeeds will likely depend on the direction of GABIA, Inc.’s stock price until September 17, the tender offer’s closing date.

An official in the financial investment industry explained, “It will be difficult to block the tender offer based solely on the withdrawal of Align, one of the three major shareholders,” adding, “The tender offer price of 48,000 won per share could be sufficiently attractive to retail investors.”