Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Suspicions grow over leaking of tender offer plans
Financial Supervisory Service headquarters in Seoul / Newsis
By Anna J. Park
ConnectWave, LocknLock, SsangYong C&E tender offers' information seems to have leaked in advance
Prior to MBK Partners' official announcement of its tender offer plan for Kosdaq-listed ConnectWave on Monday, both of their stocks' trading volumes and prices experienced an exceptional surge during Friday's trading session.
According to the Korea Exchange (KRX), the trading volume of ConnectWave's stock on the Kosdaq on Friday stood at over 1.93 million shares, an increase of more than 40 times the previous session.
The stock price also jumped 18.85 percent, finishing at 15,570 won ($11.29). While foreign and institutional investors net-purchased the stock, retail investors sold the stock on Friday's session.
The fact that this uncommon trading pattern happened on the session immediately before the announcement of the private equity firm's official tender offer plan to acquire the company's stocks at 18,000 won ($13) per share seems to support the growing suspicions that information on the tender offer plan may have been leaked.
It is not the first time such suspicions over information leaks on major tender offer plans have been raised.
Earlier this month, a day before Affinity Equity Partners initiated a public tender offer on LocknLock shares, the company's stock price soared by 11.6 percent, coupled with more than a 12-fold increase in trading volume compared to usual.
Only foreign investors were net-purchasing LocknLock shares the day before the private equity firm's official announcement of the tender offer, while institutional and retail investors dumped the stock, as if they held some inside information about the public acquisition plan. It sparked suspicions that the information on the tender offer may have been improperly leaked in advance.
The suspicious pattern of intensified net-buying by foreign investors prior to the official announcement of a tender offer was also observed during Hahn & Company's tender offer for SsangYong C&E in February this year.
The Financial Supervisory Service (FSS), the country's financial watchdog agency, said it is currently closely monitoring the recent stock price hikes of companies that are going through tender offers.
"A market information analysis team within the FSS' investigative unit is examining suspected transactions. If unfair trading practices are clearly spotted, the FSS can launch investigations," an official from the FSS said.
The investment banking industry also demands the financial regulator to swiftly address such suspicious transactional patterns, amid a a growing atmosphere of suspicion across the industry over who leaked the information, from securities firms that manage tender offer transactions to law firms assisting them.