Align Partners Announces Management Participation in Stick Investment... Increases Stake to 7.6%

Change in Purpose of Ownership from General Investment to Management Influence
Signals Proactive Moves Following Dentium, Gabia, and SoluM
Growing Demands for Stick Investment to Cancel Treasury Shares Expected

The activist fund Align Partners has increased its stake in Stick Investment to over 7% and changed its purpose of ownership from general investment to influencing management control. This move is interpreted as a bold step after failing to narrow differences with Stick Investment regarding the use of treasury shares.

According to the Financial Supervisory Service's electronic disclosure system on October 30, Align Partners changed its purpose of holding shares in Stick Investment from general investment to management influence. Along with this, it purchased an additional 411,021 shares on the market, raising its stake from 6.64% to 7.63%. Following its active interventions in companies such as Dentium, Gabia, and SoluM, Align Partners is also signaling a proactive approach toward Stick Investment.

This decision is seen as a result of unresolved conflicts over the use of Stick Investment's treasury shares. Previously, Align Partners and US-based Mill Capital demanded that Stick Investment cancel its treasury shares to increase earnings per share (EPS) and dividend yield. However, Stick Investment has continued to refuse, stating it plans to use the treasury shares for future mergers and acquisitions (M&A) or as restricted stock units (RSUs) for executives and employees, and therefore will not cancel them.

Since the founder Chairman Do Yonghwan's side already holds a minority stake, and Align Partners has acquired additional shares, the direction may ultimately shift toward the cancellation of treasury shares. Currently, the Stick Investment side holds a total of 19.04%: Chairman Do holds 13.46%, and related parties such as his children and partner-level executives hold 5.58%.

In contrast, Mill Capital of the US and Align Partners together hold a combined 21.01% with 13.38% and 7.63%, respectively, surpassing the Stick Investment side’s stake. Additionally, domestic Petra Asset Management has been purchasing shares since last month, securing a 5.09% stake. As the third amendment to the Commercial Act, which includes mandatory cancellation of treasury shares, is currently being discussed in the National Assembly, market demands are expected to intensify.