Minority CJH shareholders oppose SK-CJH deal
The logo of CJ Group is shown at the headquarters of the retail giant in downtown Seoul in this file photo. / Korea Times file
CJH says stock swap ratio reflects fair corporate value
By Kim Yoo-chul
Minority shareholders of CJ HelloVision (CJH), the country’s top pay-TV operator, filed a lawsuit with Seoul Central District Court, saying that a proposed takeover deal by SK Telecom was against their interests.
“Seventeen minority CJH shareholders who hold a combined 33,111 shares sued CEO Kim Jin-seok and the firm, seeking compensation from CJH over its passive role in defending the interests of minority shareholders,” local law firm Haneum, which represents them, said in a press release Monday.
They said the acquisition, if pushed through, will provide more benefits to shareholders of SK Broadband, the Internet protocol TV unit of SK Telecom, than to CJH shareholders.
“When you look at the takeover suggestion, each CJH share will be traded at 0.476 of an SK Broadband share. This seriously hurts the interests of CJH shareholders,” the press release said.
“Each of the CJH minority shareholders asked the company to cover certain amounts of monetary losses due to the delayed approval from the government. The amount of compensation could rise according to market situations,” Huh Won-jae, the chief lawyer, said in the release.
SK Telecom plans to purchase a 30 percent stake from CJ O Shopping, which owns 53.9 percent of CJH.
The country’s top mobile carrier will later acquire the remaining 23.9 percent stake in CJH owned by CJ O Shopping through call and put options.
“This also doesn’t make sense as CJ O Shopping did nothing to correct the swap ratio, which we believe is truly unfair,” said the release, asking CJH to correct the stock swap ratio. The release failed to include a new desired ratio.
Evaluation of the takeover suggestion had been expected to be closed by April 1. But the process has been delayed due to severe opposition by SK Telecom’s two chief rivals _ KT and LG Uplus.
Share prices of CJH spiked as the merger plan fueled expectations of the possibility of a corporate rerating on SK Telecom. However, Korea’s Fair Trade Commission (FTC), which holds the key to approving the proposed deal, has yet to make a decision.
The SK-initiated proposal needs regulatory approval from the Ministry of Science, ICT and Future Planning, the FTC and the Korea Communications Commission (KCC). The FTC declined to comment, while KCC said it is still waiting for notes from the former.
The latest round of lawsuits is the third such, after a KT employee, surnamed Yoon, and an LG Uplus employee, identified as Kim, both filed lawsuits with the Seoul Southern District Court, seeking nullification of the results of a shareholders’ meeting between CJH and SK Broadband.
CJH said the company isn’t planning to readjust the swap ratio, which had been set according to a related law.
“The stock swap ratio was set based on a thorough audit process and related law,” CJH said.
Like other international service providers, SK Telecom is eager to close the deal, as it believes that the deal will help it move into adjacent business areas such as TV and web services to offset the effects of declining corporate sales and spur sales growth.
SK is stressing that its acquisition of CJH will create synergy in areas such as content-sourcing by combining SK expertise with CJH’s content, a point that’s been drawing criticism from SK’s two chief rivals.
KT and LG Uplus oppose the proposal, saying the combination will limit consumer choice and hurt fair market competition as they believe SK Telecom plans to expand its influence in the mobile business to the TV sector.