Dongwon Industries-Dongwon Enterprise Merger Ratio Changed Based on Asset Value

[Asia Economy Reporter Jang Hyowon] Dongwon Group announced on the 18th that it has changed the merger ratio between Dongwon Industries and Dongwon Enterprises to be based on asset value.

On the same day, Dongwon Industries and Dongwon Enterprises each held board meetings and changed the merger ratio from the previous 1:3.838553 to 1:2.7023475.

To this end, Dongwon Industries adjusted the merger price upward from the previous 248,961 KRW to 382,140 KRW based on asset value rather than the standard market price.

Earlier, Dongwon Industries decided to absorb Dongwon Enterprises and submitted a preliminary review application for a backdoor listing to the Korea Exchange on the 7th of last month.

Once the merger is completed, the existing holding company Dongwon Enterprises will be absorbed into Dongwon Industries, and Dongwon Industries will become the business holding company of Dongwon Group.

At that time, Dongwon Industries set the merger ratio at 1 to 3.838553 and the merger price at 248,961 KRW based on the standard market price derived from the recent stock price.

However, shareholders criticized the process of calculating this as unreasonable.

This merger price falls significantly short of Dongwon Industries' net asset value per share of 382,140 KRW, but according to the Enforcement Decree of the Capital Market and Financial Investment Business Act, a listed company can set the merger price based on asset value if the standard market price is lower than the asset value.

Dongwon Industries applied the standard market price method, which relatively undervalued its existing equity. Shareholders had been demanding that the merger price be changed to asset value, and Dongwon Industries accepted this demand this time.

A Dongwon Group official explained, "This decision was made to enhance shareholder value and strengthen communication with the market," adding, "We changed the merger ratio considering not only legality but also appropriateness."