[Alpha Biz= Kim Jisun] Shinsegae Food is facing growing resistance from minority shareholders over the buyout price offered in its planned stock swap merger with E-Mart.

According to investment banking sources on May 3, Shinsegae Food will hold a second shareholder meeting on May 7 to explain and justify the terms of the merger. The company plans to delist through a comprehensive stock swap, proposing an exchange ratio of 1:0.5031313—meaning two shares of Shinsegae Food would be exchanged for roughly one share of E-Mart.

The controversy centers on the buyout price of KRW 48,876 per share for dissenting shareholders exercising appraisal rights. Minority investors argue the price is significantly undervalued, especially compared to the company’s estimated fair value.

Multiple accounting firms reportedly assessed Shinsegae Food’s minimum fair value at around KRW 94,692 per share based on asset value alone, with intrinsic value exceeding KRW 100,000 if ongoing business operations are considered. Critics say offering roughly half that level infringes on shareholder rights and could constitute a breach of fiduciary duty by the board.

Some investors also question the reliance on market price as the basis for valuation, noting that about 20% of listed Korean companies trade below half of their book value, which could structurally disadvantage minority shareholders in mergers.

However, others argue that market price reflects both recent performance and future outlook, making it a reasonable benchmark. Current regulations permit valuation based on stock prices, and Shinsegae Food stated that it formed a special committee of outside directors and consulted external accounting firms to determine the exchange ratio and buyout price.

The dispute highlights broader tensions in Korea’s M&A landscape over valuation standards and minority shareholder protections.

 

 

 

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