[Edaily Reporter Shin Ha-yeon ] In the KOSDAQ mergers and acquisitions (M&A) market, transactions in which control premiums are concentrated among major shareholders continue to occur. While major shareholders sell their stakes at prices significantly above market value, minority shareholders are not given the opportunity to sell under the same terms. When combined with a third-party private placement, minority shareholders also face the burden of share dilution. The mandatory tender offer system, intended to address this issue, has been put on hold in the National Assembly plenary session due to controversy over its effectiveness in protecting minority shareholders.

According to the Financial Supervisory Service’s electronic disclosure system on the 7th ( Kakao Games Corp.(293490)), a contract was signed last month to acquire a 21.43% stake held by nine individuals—including CEO Son Chang-wook, the largest shareholder of Me2on Co., Ltd(201490) —for 70.1139 billion won. The acquisition price per share is 10,000 won, which is approximately 238.4% higher than the regular session closing price of 2,955 won on the day of the disclosure.

Kakao Games Corp. also plans to participate in a third-party private placement, investing a total of 98 billion won to secure a 39.56% stake. The company explained that the goal is to expand its business portfolio and secure a stable profit base. However, the sale price of 10,000 won per share applies only to the largest shareholder and related parties. While general shareholders can anticipate future increases in corporate value, they have no opportunity to recoup their investment at the same price.

The disparity is even more pronounced in a “package deal” that combines the acquisition of existing shares with the issuance of new shares. BENO TNR(206400)announced in July that it had signed an agreement to transfer the stakes held by its largest shareholder, Lamicus, and one other individual to Acro New Technology Fund No. 241 for approximately 33.96 billion won. The price per share was 7,100 won, significantly higher than the market price at the time, which was around 1,000 won.

In contrast, the issue price per share for a 10 billion won rights offering targeted at the acquirer was 852 won. This structure allowed the acquirer to secure 11,737,089 new shares at approximately one-eighth the price paid for the existing shares. While the proceeds from the sale of existing shares went to the major shareholders and the new largest shareholder secured a large stake at a discounted price, ordinary shareholders were effectively excluded from the premium and had to accept a decline in their ownership stake.

TOEBOX KOREA, Ltd.(215480)Additionally, GGUMBI Inc.(407400)carried out a transaction in which it acquired approximately 1.19 million existing shares from the largest shareholder for about 10 billion won and purchased 1.79 million new shares for about 3.6 billion won. During this process, Golden Eagle, the second-largest shareholder, filed for a preliminary injunction to block the issuance of new shares, leading to a legal dispute.

The mandatory tender offer system, designed to address such imbalances in sale opportunities among shareholders, still has a long way to go before it is implemented. Although it passed the Political Affairs Committee and the Legislation and Judiciary Committee last month, its consideration in the plenary session—scheduled for the 1st of this month—was postponed. This was because domestic and international asset management firms demanded further discussion, arguing that the measure does not sufficiently protect minority shareholders.

According to the amendment, the mandatory tender offer system would apply in cases where a party becomes the largest shareholder—holding 25% or more—by preemptively purchasing shares of a listed company. The acquirer must conduct a tender offer for a quantity equal to or greater than “50% plus one share” of the issued shares, minus their existing holdings. This system obligates acquirers taking over management control to purchase shares from minority shareholders at a price that reflects a control premium, thereby giving minority shareholders the opportunity to sell their stakes at the same price.

Eighteen domestic and international asset management firms proposed a “proportional tender offer”—in which major shareholders and general shareholders participate together—as an alternative. A proportional tender offer does not allow major shareholders to sell their shares first; instead, it allocates selling opportunities to all participants at the same ratio, thereby increasing the volume of shares that general shareholders can sell.

The current bill does include a provision for purchasing excess subscriptions on a pro rata basis. However, it differs in that the major shareholder first sells their entire stake, after which the remaining shares are divided among the general shareholders. This also contrasts with the practices in the United Kingdom, the European Union (EU), Hong Kong, and Singapore, where, in principle, a tender offer is required for all remaining shares when acquiring controlling interest.

Some argue that to uphold the original intent of protecting minority shareholders, the law should go beyond partial buyouts and mandate a mandatory tender offer for all remaining shares. Kim Woo-chan, a professor at the Korea University Business School, commented on the mandatory tender offer system centered on the “50% + 1 share” threshold, stating, “This means that out of the 60% held by minority shareholders, only 10% receives equal treatment to the major shareholder, while the remaining 50% faces discriminatory treatment.” “The purpose of introducing the mandatory tender offer system is to ensure equal treatment of shareholders, but if only a tiny fraction of shares can be sold at the same price as those held by major shareholders, discrimination still exists,” he pointed out.

He continued, “I am not arguing that a proportional tender offer is the most ideal solution, but rather that it is a second-best option to at least avoid discriminating between major shareholders and ordinary shareholders,” adding, “Ideally, the correct approach would be to purchase 100% of the remaining shares.”