Park Han-sol reports on Korea's financial regulators, along with fintech and insurance. She previously wrote about the art world, from biennales and exhibitions to fairs and auctions, with a focus on Seoul and the figures shaping the scene. Before joining The Korea Times, she spent a year at ABC News' Seoul bureau, contributing to coverage of major Asia-Pacific events.
Woori Financial's bid to take Tongyang Life private continues to stall amid shareholder backlash
Tongyang Life Insurance headquarters in Seoul / Courtesy of Tongyang Life Insurance
By Park Han-sol
Woori Financial Group’s plan to take Tongyang Life Insurance private has hit a snag in the final stages, as a dispute over the proposed share-swap ratio draws heightened regulatory scrutiny and underscores Korea’s growing emphasis on protecting minority shareholders, according to industry watchers Tuesday.
The case highlights a broader dilemma facing financial holding companies: how to pursue strategic acquisitions while still demonstrating that such deals are fair to ordinary shareholders.
Woori is carrying out a comprehensive share swap to acquire the remaining stake in Tongyang Life, the final step in bringing the insurer under full ownership following last year’s acquisition. Under the proposed terms, the life insurer’s shareholders would receive 0.2521056 Woori Financial shares for each Tongyang Life share they own.
The Financial Supervisory Service (FSS), however, ordered the holding company to revise its securities registration statement, seeking additional disclosure on the rationale for the deal and the methodology used to calculate the exchange ratio.
The main point of contention is the valuation gap between the price Woori paid for the controlling stake last year and the terms now being offered to minority shareholders.
Last year, Woori acquired the stake held by China’s Dajia Insurance Group at 10,562 won ($6.82) per share. Under the current proposal, however, Tongyang Life shares are valued at 8,720 won apiece, roughly 17 percent lower.
Woori and Tongyang Life maintain that the two transactions are not directly comparable.
“The acquisition of the controlling stake and the current share swap are fundamentally different transactions in terms of their timing, structure and purpose,” a Tongyang Life official said. “The earlier purchase reflected a control premium and strategic value, whereas the current exchange ratio was determined under statutory pricing rules after Woori had already secured management control.”
The company added that the proposed ratio complies with relevant regulations and falls within the valuation range determined by two independent accounting firms.
But minority investors contend that the issue is not whether the calculation satisfies legal requirements but whether the outcome is substantively fair.
The disagreement remained unresolved during a heated second meeting with minority shareholders on June 22, where some investors stressed that the roughly 17 percent discount to last year’s acquisition price was “legal, perhaps, but not fair.”
The outcome matters well beyond a routine squeeze-out for Woori. Unlike its rivals KB Financial, Shinhan Financial and Hana Financial, the group has long lagged in building a nonbanking earnings base. Taking Tongyang Life private is central to its strategy of strengthening its insurance business and diversifying its revenue streams.
More broadly, the episode illustrates how expectations surrounding intragroup transactions are changing in Korea. Whereas compliance with statutory valuation formulas was once largely sufficient, regulators are increasingly requesting firms to demonstrate not only procedural compliance but also substantive fairness to minority shareholders. That shift has become more pronounced following recent revisions to the Commercial Act.
The evolving regulatory environment is also raising questions within the industry over how listed companies should approach future share-swap deals.
“If a company follows the valuation methodology prescribed by law but minority shareholders still consider the outcome unfair, it becomes difficult to know what standard listed companies are expected to meet,” one industry official said. “The greater emphasis on substantive fairness could increase uncertainty for future corporate reorganizations.”
Woori plans to submit its revised FSS filing in early July. Under the original timetable, investors were due to vote on the transaction at an extraordinary general meeting on July 24, with the share swap scheduled for Aug. 11 and the delisting expected later that month.