Sumin Kim, CEO of Unison Capital Korea
Targets Minimum Stake Acquisition Needed to Secure Management Rights
Plans to Enhance Value by Improving Business Structure and Sales Channels
[Asia Economy Reporter Park So-yeon] Kim Soo-min, CEO of Unison Capital Korea (UCK), which is pursuing the acquisition of Osstem Implant’s management rights through a tender offer, stated, "We do not plan to forcibly drag the process until delisting." He added, "Once a certain level of shares is secured, we will operate the company with the management rights in that state."
On the 26th, CEO Kim said, "The most important point is to succeed in the tender offer and secure at least the minimum shares." He added, "Considering yesterday’s stock price trend, trading volume, and the rationale for minority shareholders, it seems that many tender offer applications will come in and it looks promising." He emphasized, "If the tender offer is so successful that all shares are requested for purchase, the market’s circulating shares will disappear, naturally leading to delisting, but that itself is not the purpose."
CEO Kim firmly denied suspicions raised by some that he is a white knight for Osstem Implant Chairman Choi Kyu-ok, saying, "(Since there is an investment purpose) that is not the case." He hinted, "Osstem is a company with strong fundamentals, but we plan to increase corporate value over a long period of transformation," estimating it will take about seven years. He said, "Among the undervaluation factors of Osstem Implant’s corporate value, the governance issues claimed by the Kang Sung-bu fund are only a very small part," adding, "If business structure, digitalization, and sales channels improve, the value can be re-evaluated." He added, "Benchmarking global leaders like Straumann and Align Technology, it will require a very long period of significant changes to reach that level."
On the previous day, domestic private equity funds UCK and MBK Partners (MBK) announced they would pursue management rights acquisition by publicly tendering Osstem Implant shares. They also stated they would purchase one share from general shareholders and one share from the largest shareholder at the same price. UCK and MBK have already secured 9.3% of shares from Chairman Choi Kyu-ok, the largest shareholder, and proposed the tender offer price at 190,000 KRW, the same as when purchasing Chairman Choi’s shares. This is the first case in the capital market where general shareholders have the opportunity to sell at the same price as the controlling shareholder who holds a management premium.
CEO Kim emphasized, "This is the first attempt in Korea and has great social significance; it will become a benchmark case in the future M&A market." He said, "Even if one wants to try this, it is impossible unless the largest shareholder agrees," adding, "Looking at the long term, I sincerely persuaded that this attempt helps restore the honor of the company and the largest shareholder."
CEO Kim first met Chairman Choi of Osstem last spring. After their first meeting, Kim visited Chairman Choi more than thirty times over about a year. He fully utilized his network of dentists built while acquiring and operating Medit, a company specializing in oral scanners. He said, "Trust was gradually formed by contacting (Chairman Choi) through dentists rather than law firms or consulting firms, so the largest shareholder accepted it," adding, "In fact, it probably was not an easy decision for Chairman Choi either." He further mentioned, "If this case becomes a standard, it will be difficult for such deals in the future to ignore general shareholders and only give premiums to the largest shareholder."
Recently, financial authorities have been pushing to reintroduce the mandatory tender offer system for the first time in 25 years. This system guarantees that minority shareholders of the acquired company can sell their shares to the acquirer at the same price as the controlling shareholder when a listed company is merged or acquired. Although most M&As in Korea (84.3%) are conducted through share transfers by purchasing the largest shareholder’s shares, there have been no adequate shareholder protection measures such as appraisal rights, leaving general shareholders opposing the acquisition unprotected. Although the system has not yet been officially introduced, UCK and MBK have taken the first step with this Osstem Implant case.
Meanwhile, Osstem Implant, the undisputed number one company in Korea, surpassed 500 billion KRW in sales for the first time in 2019, then rapidly grew to 631.6 billion KRW in 2020 and 824.6 billion KRW in 2021. It ranks 4th globally by sales and 1st by sales volume. Especially, growth in global markets such as China, which has high growth potential, is steep. Osstem Implant’s sales in China last year increased by about 26% from the previous year to approximately 280 billion KRW. There are about 14,000 dental clinics using Osstem Implant products in China. Its local market share by sales is 28%. It is evaluated to have established a solid position by winning the largest quantity in the first year of China’s volume-based procurement (VBP) bidding announced on the 11th. Osstem Implant was established in 1997, focusing on manufacturing and selling dental implants and developing dental management programs. It was listed on KOSDAQ in 2007.
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