SEOUL, November 13 (AJP) - President Lee Jae Myung called Friday for measures to encourage corporate takeovers and urged lawmakers to resolve a dispute over mandatory tender offers without further delay, arguing that a more active market for mergers and acquisitions would benefit shareholders.
Speaking at a capital market policy meeting at the Korea Exchange in Seoul, Lee said facilitating takeovers, including hostile bids, could help address what he described as the abnormal undervaluation of Korean companies.
The debate centers on how much stock buyers should be required to purchase when acquiring control of a listed company, and whether controlling and minority shareholders should have equal opportunities to sell.
A proposal before the National Assembly would require buyers acquiring at least 25 percent of a listed company and becoming its largest shareholder to offer to raise their holdings to at least 50 percent plus one share, including shares already acquired.
Critics argue that allowing buyers to purchase the controlling shareholder’s entire stake first leaves minority investors with fewer opportunities to sell at the same takeover premium. Alternatives include requiring an offer for all remaining shares or allocating purchases proportionally among controlling and minority shareholders.
Lee indicated that he leaned toward encouraging dealmaking to expand the market’s overall value, while acknowledging that the competing interests required further political discussion.
“The party will need to continue its discussions, and I hope there will not be too much delay,” Lee said.
He held an impromptu vote among participants on the competing approaches. A proposal retaining the 50-percent-plus-one-share threshold while applying proportional allocation equally to controlling and minority shareholders drew relatively strong support.
Lee did not announce a final decision on the purchase threshold or allocation method.
He separately urged officials to examine mechanisms that obstruct hostile takeovers and consider whether listed companies effectively operated as their owners’ private businesses should remain on the market.
The Financial Services Commission has favored proceeding with the parliamentary compromise, saying the effects on minority shareholders and dealmaking could be assessed before considering broader purchase requirements.
Korea introduced a mandatory tender-offer rule in 1997 but abolished it in February 1998 amid concerns that it would impede acquisitions and delay corporate restructuring. The current debate revisits the tension between giving minority investors access to takeover premiums and limiting the cost of acquiring corporate control.
Lee Jung-woo
I studied philosophy in college, and sociology and journalism in graduate school. I cover North Korea, South Korean politics, foreign affairs and films. I enjoy Nordic cinema, Indian cuisine and Japanese detective novels. I have a cat and like bright, acidic coffee.
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