Photo courtesy of Yonhap News

 

 

[Alpha Biz= Paul Lee] Value Partners Asset Management has raised concerns over the proposed comprehensive share swap between Shinsegae Food and E-Mart, arguing that the deal structure and decision-making process are skewed in favor of the controlling shareholder.

The asset manager said on April 22 that it had sent a shareholder letter to Shinsegae Food’s management and board on April 20, warning that the transaction creates a conflict of interest between controlling and minority shareholders and could undermine shareholder value.

According to the letter, Shinsegae Food’s implied valuation stands at KRW 50,191 per share—only about 0.53 times its net asset value (NAV) of KRW 94,692 per share as of end-2025. Value Partners argued that the deal effectively values the company at roughly half of its liquidation value.

The firm also pointed to a significant gap between the agreed valuation and external assessments. Accounting firm Hanul, advising E-Mart, estimated a valuation range of KRW 176,080 to KRW 309,854 per share, while Soop Accounting, advising Shinsegae Food, suggested a range of KRW 128,787 to KRW 191,035—both substantially higher than the agreed merger price.

Governance structure was also cited as a key concern. Chung Yong-jin holds a 28.85% stake in E-Mart, which in turn owns 71.18% of Shinsegae Food, limiting the influence of minority shareholders, the firm argued.

Value Partners further criticized the independence and expertise of Shinsegae Food’s board and special committee, noting that members were appointed under the influence of the controlling shareholder and lack sufficient experience in finance, valuation, and capital markets to assess the fairness of the deal.

The asset manager also questioned inconsistencies in valuation methodologies. While Shinsegae Food sold part of its catering business in the second half of 2025 at around four times its price-to-book ratio (PBR), the overall company valuation in the current deal reflects only about half of its net asset value.

It also noted that minority shareholders were not given adequate time to assess investment outcomes, particularly following a KRW 50 billion investment in a cosmetics ODM business, which was soon followed by the merger process without sufficient reflection of associated risks and returns.

Despite having financial capacity, the company has not implemented shareholder-friendly measures such as share buybacks or cancellations, even though it held net cash of around KRW 20 billion as of end-2025, the firm added.

Value Partners called for measures including share buybacks and cancellations prior to the merger, the introduction of a majority-of-minority approval process, and full disclosure of valuation assumptions.

CEO Yoon Jong-yeop said, “Minority shareholders are not seeking preferential treatment, but simply the same value per share as controlling shareholders,” warning that the current structure could result in a transfer of wealth in favor of the controlling shareholder.

 

 

 

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