It has been confirmed that Lock&Lock, which voluntarily delisted in December of last year, requested minority shareholders with remaining equity to agree on the stock purchase price, offering to buy shares at a price 5 won higher than before (8,755 won). Lock&Lock plans to conduct price negotiations for the stock purchase request against minority shareholders who opposed the comprehensive stock exchange process as an amicable dispute. An amicable dispute is a procedure that swiftly induces reconciliation between parties without litigation.
Minority shareholders are showing resistance. This is because the price proposed by the company does not even reach a price-to-book ratio (PBR) of 1, and the proposal is seen as semi-coerced. Most minority shareholders are showing a firm attitude that they will not respond to the company’s request.
According to the financial investment industry on the 26th, Lock&Lock sent a stock purchase request price determination application to 35 minority shareholders this month. Currently, 198 minority shareholders have filed a request with the court for a determination of the stock purchase price, and the case is ongoing, indicating that Lock&Lock preemptively informed the remaining shareholders.
Previously, Affinity Equity Partners, a Hong Kong private equity firm that acquired Lock&Lock in 2017, attempted to secure more than 95% of the equity required for voluntary delisting through two public purchases and additional purchases starting in April of last year.
However, during the public purchase, some shareholders did not participate in the purchase subscription, citing that the public purchase price of 8,750 won was excessively low. As the equity ratio remained at around 91% until October of that year, Affinity established a new domestic corporation, Consumer Phoenix, and devised a strategy to acquire the remaining shares through a comprehensive stock exchange after in-kind contributions.
A comprehensive stock exchange is when the largest shareholder with more than two-thirds of the equity converts the shares of other shareholders into shares or cash of the parent company. It is possible to delist even without meeting the 95% equity requirement. At an extraordinary general meeting on October 21 of the same year, the comprehensive stock exchange was approved. The price was issued to shareholders in the same way as the public purchase, at 8,750 won per share. Subsequently, Lock&Lock was transformed into a wholly-owned subsidiary of Consumer Phoenix and was delisted on December 9.
However, some shareholders holding about 1.3 million shares (3% equity) raised questions about procedural legitimacy, with approximately 198 minority shareholders holding about 1.2 million shares filing a request for determination of the stock purchase price with the court. The company recently sent determination price application forms to the remaining minority shareholders holding about 100,000 shares.
Considering interest and other expenses, it is believed that the purchase price must be determined quickly to reduce expenses; thus, the company judged that it is better to initiate an amicable dispute rather than wait for the shareholders to file.
At the same time, Lock&Lock requested shareholders to negotiate the purchase price, stating it would raise the price from the current 8,750 won to 8,755 won by 5 won. It stated that further increases would be difficult considering fairness with shareholders who received cash compensation. Lock&Lock also revealed that it is conducting the stock purchase price determination application for the 198 minority shareholders as an amicable dispute and hopes to merge the two cases.
Shareholders criticized the semi-coerced proposal at the price set by the company. Shareholder A, who received the application the previous day, said, “I have no intention of responding to a proposal that is confusing as to whether it is negotiation or notification,” adding that, “unless a reasonable price around the price-to-book ratio (PBR) of 1 is proposed, I would rather consider going underground.”
In response, Affinity stated, “We have no separate position on this matter.”