Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
What challenges lie ahead after Naver's acquisition of Dunamu?
A banner featuring the logos of Dunamu and Naver is displayed at Naver's second office building in Seongnam, Gyeonggi Province, Thursday. Yonhap
By Lee Yeon-woo
Naver’s decision to acquire crypto giant Dunamu through its fintech arm Naver Financial marks an unprecedented convergence of Big Tech and virtual assets. But the deal, announced last week, faces significant hurdles, including shareholder approval and lingering regulatory uncertainty, industry officials said Sunday.
Naver Financial said Wednesday it plans to acquire Dunamu as a wholly owned subsidiary through a stock swap deal, offering 2.54 shares of Naver Financial for each Dunamu share. Executives say the aim is to build a global infrastructure that spans payments, finance and everyday services based on artificial intelligence and Web3.
To complete the stock swap, slated for June 30 next year, the two companies must pass a special shareholder resolution scheduled for May 22 in that year. Approval requires participation from at least one-third of all issued shares and a two-thirds majority of those in attendance.
While Naver Financial is effectively under Naver's control, Dunamu must secure additional shareholder support beyond the 41.7 percent of its shares held by management, including Chairman Song Chi-hyung and Vice Chairman Kim Hyung-nyon.
It is also notable that two companies included a clause allowing either side to walk away if the exercise of appraisal rights exceeds 1.2 trillion won ($816 million). With Dunamu offering 439,252 won per share, opposition from just 8 percent of outstanding shares could jeopardize the deal.
That makes winning over both major and minority shareholders critical. The parent company of Kakao Investment, Dunamu's third-largest shareholder with a 10.9 percent stake, is a direct competitor to Naver and is expected to be resistant. Minority shareholders have also expressed frustration over Dunamu's failed domestic listing and lingering uncertainty surrounding a potential Nasdaq debut.
Regulatory approval is unlikely to come easily.
Financial authorities are reviewing potential risks tied to the convergence of digital payments and virtual assets. Korea's regulators have historically drawn a hard line between the two industries, citing stability concerns. While some market watchers note a softening stance, the legal framework around the deal remains vague and could potentially delay approvals.
The Fair Trade Commission (FTC) is also weighing whether the deal could stifle competition. Both Naver Financial and Dunamu hold dominant positions in their sectors, raising antitrust concerns.
"This merger raises an enormous number of issues for the financial sector," an official from the financial authorities said. "As there are currently no established regulations for this area, we are monitoring the situation very closely."
Compounding the challenge is a cybersecurity incident at Upbit, Korea's largest cryptocurrency exchange operated by Dunamu. The company disclosed on Friday that the cyberattack, which occurred the previous day, resulted in user losses of about 38.6 billion won. The incident has reignited concerns over platform security and dealt a blow to user trust at a critical moment.
Investor sentiment soured, with Naver shares closing at 244,000 won on Friday, down 2.98 percent, while the KOSPI fell 1.51 percent to 3,926.59. It marked the second consecutive day of losses for the tech giant, following a 4 percent drop on Thursday, a day after the mega merger deal was announced.
Still, brokerages have positively assessed the emergence of a mega financial platform valued at 20 trillion won.
"Although the likelihood of the deal falling apart is considered low, investors may need a bit more patience until the FTC and Financial Services Commission reach their decisions," said Jung Ho-yoon, an analyst at Korea Investment & Securities.
"As stablecoin and tokenized-asset markets grow rapidly worldwide, Korea is also expected to open new markets through forthcoming legislation." Jung said. "Naver and Dunamu are well positioned to emerge as prominent players in this space."