[Wealth Succession] MS Autotech① Merger Price Calculation Favorable to Major Shareholder

After Merger, 'Simwon' Control Rises from 28.6% to 34%
Minority Shareholders Granted Stock Purchase Rights 30% Below Asset Value

MS Autotech will absorb and merge its parent company and MS Group's holding company, 'Simwon.' Simwon is a corporation wholly owned by Lee Taegyu, director of MS Autotech and son of MS Group founder Lee Yangseop, along with his relatives.

MS Autotech has valued the merger at a standard stock price significantly lower than the asset value. If the merger is completed, it is expected that the control of Simwon's owner, Director Lee Taegyu, will increase. On the other hand, minority shareholders are expected to receive stock purchase rights at a price far below the asset value.

According to the Financial Supervisory Service's electronic disclosure system on the 29th, MS Autotech announced that it will absorb and merge its parent company, Simwon. The largest shareholder of Simwon is Song Hyesung, wife of Lee Taegyu, director of MS Autotech, holding 48.6%. The remaining shares are also 100% family-owned companies held by special relations of Director Lee Taegyu.

Simwon is the holding company of MS Group. It holds shares in MS Autotech, Myungshin Industry, and others. Once this merger is completed, MS Autotech will stand at the top of MS Group's governance structure.

The Lee Taegyu family is expected to increase their control over MS Autotech after the merger. Currently, Simwon holds 13,087,828 shares (28.66%) of MS Autotech. After the merger, Simwon will receive 23,513,936 new shares of MS Autotech, securing about 34% ownership. Combining all shares personally held by Lee Taegyu and others, control will strengthen from the existing 40.26% to 41.64%.

The reason for the increased shareholding ratio is due to the merger ratio. The merger ratio between MS Autotech and Simwon is 1 to 71.25 shares. MS Autotech will issue 71.25 new shares for every one share held by Simwon's existing shareholders. The value per share of MS Autotech was calculated at 4,360 KRW, and Simwon's at 310,669 KRW, resulting in this merger ratio. The lower the value of MS Autotech, the more shares Simwon shareholders receive.

MS Autotech calculated the merger price based on the standard stock price rather than the asset value. The standard stock price is the average stock price before the merger, and the asset value is calculated based on the company's net assets in the most recent fiscal year. The standard stock price is 4,360 KRW per share, while the asset value is 6,314 KRW.

According to the Enforcement Decree of the Capital Market Act, if the standard stock price is lower than the asset value, the merger price can be calculated based on the asset value. In MS Autotech's case, the merger price could have been set at 6,314 KRW instead of 4,360 KRW.

While the merger price of MS Autotech is low, increasing the owner's control, minority shareholders will receive stock purchase rights at a relatively low price. MS Autotech grants stock purchase rights to shareholders opposing the merger. The planned purchase price is 4,439 KRW. Although this is 1.8% higher than the merger price, it is about 30% lower than the asset value.

Regarding this, an MS Autotech official explained, "Simwon's asset value was evaluated based on the shares it holds in Myungshin Industry and MS Autotech, rather than its actual operating profit value. Since the market prices of Myungshin Industry and MS Autotech were reflected in the asset value, we received advice from law firms and accounting firms that it is reasonable for MS Autotech to calculate the merger price based on the standard stock price."

Meanwhile, MS Autotech will hold a shareholders' meeting related to this merger on June 27. Shareholders will be confirmed as of June 11, and objections to the merger will be accepted from June 12 to 26.