EQT: "52% of Douzone Bizon Shares Traded in Five Days of Tender Offer"

"Greater Likelihood of Successful Delisting"

Global private equity firm EQT announced that its tender offer for Douzone Bizon, aimed at delisting the company, which began on February 23, is proceeding smoothly. EQT explained that it is proactively complying with the intent of the mandatory tender offer system, which is scheduled to be introduced, and has received positive feedback for offering minority shareholders the same premium as the largest shareholder.

Following the announcement of the tender offer for Douzone Bizon, a large trading volume of 9.48 million shares, representing 52% of the shares subject to the tender offer, was recorded during the first five trading days. In particular, institutional investors and foreign investors were observed purchasing in large quantities. During these five days, the share price remained slightly below the tender offer price of 120,000 won.

EQT stated, "In the domestic capital market, we consider the following three situations as indicators of a successful tender offer: the share price remains slightly below the tender offer price after the start of the tender offer, individual investors sell while institutional investors and others buy, and a large trading volume occurs in the early days of the tender offer."

In fact, on February 27, Douzone Bizon's closing price was 118,400 won per share, 1.3% lower than the tender offer price, marking the highest price since September 2020. EQT noted that most Douzone Bizon shareholders are expected to be able to realize profits by selling on the market, stating, "During these five trading days, individual shareholders sold approximately 6.21 million shares on the market, demonstrating a large-scale selling trend. Institutional investors and foreign investors purchased most of the shares sold by individuals, exemplifying typical tender offer arbitrage trading." In this type of arbitrage, institutional investors and foreign investors, who aim for a profit margin of around 1%, purchase shares sold by individuals on the market and then realize gains by participating in the tender offer application.

It is typical for trading volume to gradually decrease after peaking on the first day of a tender offer. Therefore, the higher the trading volume during the first five trading days, the higher the likelihood that tender offer arbitrage trading is occurring intensively, which increases the probability of a successful tender offer. During the first five trading days following the announcement of Douzone Bizon's tender offer, the total trading volume reached approximately 9.48 million shares, which is about 52% of the 18.16 million shares subject to the tender offer and approximately 33% in terms of ownership ratio-a substantial volume. In recent cases where private equity funds successfully completed delistings, such as Lutronic, Jcismedical, Businesson, and Viol, more than half of the shares subject to the tender offer were traded during the first five trading days, and the tender offers were successfully completed.

After the tender offer, EQT is also considering a comprehensive share exchange procedure using a cash settlement method as part of its delisting plan, similar to the cases of Lutronic, Jcismedical, and Businesson. If this procedure is carried out, under the relevant provisions of the Commercial Act, minority shareholders of Douzone Bizon would sell their shares to EQT and receive cash. In past cases, the cash amount per share has been similar to the tender offer price, but since it takes more than two months from the end of the tender offer to the share exchange date, individual shareholders may incur opportunity costs on their investment in Douzone Bizon shares during this period.

This content was produced with the assistance of AI translation services.