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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Sangjin] Sustinvest, a domestic proxy advisory firm, announced on the 21st that it recommends opposing the merger proposal between SK Group affiliates. The firm cited concerns over potential conflicts of interest and the unfavorable merger ratio for SK Innovation's minority shareholders.
Sustinvest stated, "The merger ratio was determined in a way that is disadvantageous to the general shareholders of SK Innovation without sufficient consideration of conflict-of-interest issues during the merger process between the listed company, SK Innovation, and the unlisted company, SK E&S, both of which have the same major shareholder." They added that there is a risk of long-term shareholder value erosion.
Although the merger ratio adheres to the Capital Markets Act, the firm pointed out that the price-to-book ratio (PBR) of SK Innovation was at a historically low level of 0.36 at the time of the board resolution. This PBR was significantly below the average PBR of peer companies, raising concerns that the company's stock value may not have been adequately reflected.
Sustinvest also suggested that using market prices to determine the merger ratio may not be the best approach from the perspective of all shareholders and that applying asset value would be more appropriate. They noted that depending on whether market value or asset value is used to determine the merger price, there could be a more than 8 percentage point difference in the ownership stakes of SK and general shareholders in the merged company, which raises further conflict-of-interest concerns.
The firm criticized the board of SK Innovation for failing to provide sufficient transparency and fairness in protecting the rights of minority shareholders, noting that the efforts to minimize the impact on general shareholders were unclear.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
