[Edaily Marketin Reporter Hur Jieun ] Tensions are escalating between the largest shareholder and the parent company over the sale of Golfzon County. This comes after Golfzon County ( GOLFZON NEWDIN HOLDINGS Co., Ltd.(121440)) announced it would take legal action, calling the sale “unilateral,” the day after MBK Partners signed a Share Purchase Agreement (SPA) with the The Siena Group consortium, and MBK Partners immediately refuted the claim. Legal experts generally agree that even if a legal battle ensues based on the shareholders’ agreement between the two parties, the likelihood of the final sale falling through is low.

According to investment banking (IB) industry sources on the 31st, MBK Partners signed a Share Purchase Agreement (SPA) with the The Siena Group consortium to sell 100% of GOLFZON Co., Ltd.’s shares for approximately 850 billion won (enterprise value of 1.8 trillion won). Under the terms of the Shareholders’ Agreement (SHA) signed at the time of MBK’s 2018 investment, MBK is exercising its drag-along right to sell its stake in GOLFZON HOLDINGS as part of the same transaction. Currently, MBK holds a 68.4% stake in Golfzon County, while GOLFZON HOLDINGS holds 31.6% (including convertible preferred shares).

Backlash

from Golfzon Holdings the Day After Signing… MBK Calls It a “Conditional Agreement”

GOLFZON HOLDINGS, the second-largest shareholder and parent company, claimed that this sale constitutes a “unilateral sale” by MBK and warned of legal action. In a statement released on the 28th, GOLFZON HOLDINGS argued that MBK had ignored its demands for an initial public offering (IPO) and its objections to unfair lease terms, and that the move ran counter to the spirit of cooperation based on the guarantee of management control. The company further stated, “We cannot agree to MBK’s unilateral push to sell GOLFZON County.”

In response, MBK countered on the 29th, stating, “The guarantee of management control was a conditional agreement contingent upon the success of the IPO, and it was GOLFZON HOLDINGS itself that agreed to a sale to a third party should the IPO fall through.” When the IPO failed to materialize within the deadline, MBK shifted its strategy to a direct sale of its stake and made a sale proposal to GOLFZON HOLDINGS; however, MBK stated, “At the time, GOLFZON HOLDINGS did not make any counterproposal and merely responded that it hoped to proceed with the IPO.” The sale of Golfzon County, which had been attempted since 2023, gained momentum this year with the selection of Morgan Stanley and Samjung KPMG as lead underwriters.

In fact, GOLFZON HOLDINGS is reported to have participated in the bidding process for the acquisition of Golfzon County. However, the industry view is that GOLFZON HOLDINGS was eliminated from the final competition after The Siena offered more favorable price terms to the sellers, and that it subsequently announced plans to take legal action in protest of the sale following the signing of the SPA.

Joint Sale if IPO Fails Within 5 Years… A Key Provision of the Shareholders’ Agreement

GOLFZON Co., Ltd. is a newly established corporation formed in 2018 by spinning off the golf course operations and booking businesses from GOLFZON HOLDINGS (formerly Golfzon Newdin). At the time of GOLFZON Co., Ltd.’s establishment, MBK Partners invested 114 billion won through its Buyout Fund No. 4 and, including a capital increase (288 billion won), invested a total of 402 billion won.

According to the shareholders’ agreement signed by both parties in 2018, the deadline for GOLFZON Co., Ltd.’s IPO was five years. If the IPO is not completed within that period, MBK can sell its stake in GOLFZON HOLDINGS as well through a drag-along right, while GOLFZON HOLDINGS holds a tag-along right (right to participate in the sale) and a right of first refusal. The right of first refusal is the right to purchase the shares first when MBK sells its stake; if this right is not exercised, the path is opened for the shares to be sold alongside MBK’s.

Legal experts view this as a matter to which GOLFZON HOLDINGS had consented in advance. They explain that GOLFZON HOLDINGS directly agreed to the transaction terms when securing investment in 2018, and since triggering the drag-along clause constitutes a legitimate exercise of rights following the failure of the IPO, there is little legal basis to block it. A lawyer specializing in capital markets explained, “GOLFZON HOLDINGS is not a direct party to the SPA but is subject to the drag-along clause,” adding, “Even though GOLFZON HOLDINGS was given the opportunity to exercise its right of first refusal, if it did not make a purchase offer, it will be difficult to prevent MBK from exercising its rights.”

Voluntary Delisting Stalled; IPO Falls Through Due to Prohibition on Dual Listings

Internal circumstances at GOLFZON HOLDINGS are also at play. SY CO., LTD., the largest shareholder of GOLFZON HOLDINGS, increased its stake to around 85% through a first tender offer at 6,700 won per share between June and August to facilitate a voluntary delisting. However, the effort ultimately failed when the second tender offer conducted in September received zero subscriptions. This was because Terton Capital declared it would not participate, causing the stock price to rise above the tender offer price. With GOLFZON HOLDINGS’ voluntary delisting blocked, Golfzon County’s IPO has effectively fallen through due to the ban on dual listings. This means that GOLFZON HOLDINGS’ long-standing push for an IPO has lost its momentum.

Some in the industry are drawing parallels between this conflict and the cases involving NamyangDairyProducts and TaylorMade. Hong Won-sik, the former chairman of NamyangDairyProducts, notified Han & Company of the termination of their SPA just three months after signing it; the dispute, which lasted about three years, ended in a victory for Han & Co. Centroid and F&F previously clashed over the scope of F&F’s pre-approval rights and right of first refusal.

In fact, depending on whether GOLFZON HOLDINGS and MBK end up in a legal battle, there is a possibility that the entire deal schedule could be disrupted. If GOLFZON HOLDINGS refuses to cooperate with the share transfer, it could lead to a preliminary injunction or an enforcement lawsuit, which could in turn affect the acquirer’s conditions precedent and the schedule for acquisition financing. While the likelihood of the sale falling through is low, observers suggest that the closing date of the transaction could be delayed.