A tender offer for KOSDAQ-listed Gabia is escalating into a dispute over corporate governance and the protection of minority shareholders. Align Partners Asset Management, Gabia's third-largest shareholder, has requested a special shareholder meeting to reshape the board, arguing that the tender offer — which is premised on delisting — was decided and carried out without a board resolution.
According to investment banking sources on the 19th, Align Partners requested a special shareholder meeting and put forward a proposal to amend Gabia's articles of incorporation to expand the board from five directors to seven. Along with that, it proposed the appointment of independent directors Kwak Jun-ho and Cho Sung-moon and non-standing director Eom Tae-hyun. Gabia's board currently consists of five members. If one seat becomes vacant, all three nominees could be appointed; if there is no change, only the two independent directors, Kwak and Cho, could be seated.
Align Partners contends that the board failed to properly review or approve the tender offer that Macquarie Asset Management is conducting for Gabia. Macquarie signed a share purchase agreement (SPA) on the 17th of last month to acquire all of the common shares — a 24.37% stake — held by two people, including Gabia CEO Kim Hong-kook, the company's former largest shareholder. Earlier, on April 25, the two sides signed a non-disclosure agreement (NDA), after which an accounting firm conducted 19 days of due diligence on the company. Align Partners pointed out that there was no board resolution or report on that process.
In due diligence for a merger or acquisition, a company typically provides key business and financial information, because the buyer examines it closely to identify risks not visible in the financial statements before signing a legally binding contract. On this point, Gabia said in an investor relations document on the 7th of this month that "(Kim and the others) stated at a July 30 board meeting that the materials provided in the financial due diligence were the customary materials needed for such due diligence." Macquarie's tender offer for Gabia began on July 20.
Align Partners argued that the valuation should take into account the duplicate listing of KINX, a core Gabia subsidiary. KINX is an affiliate of the listed company Gabia and also holds another listed company, SPSoft, as a subsidiary. On that basis, Align said the current share price is undervalued and that the valuation should be based on earnings such as EBITDA (earnings before interest, taxes, depreciation and amortization). Align Partners calculated Gabia's intrinsic value at a minimum of 65,400 won per share, about 36% higher than the tender offer price of 48,000 won per share.
Align Partners asked Gabia to disclose by the 25th of this month whether it will convene a special meeting and its expected date, and by the 2nd of next month to state the board's position on the tender offer process and the valuation results. Macquarie's tender offer for Gabia, premised on delisting, ends on the 17th of next month. Align Partners, a major shareholder with a 14.29% stake in Gabia, can convene a special meeting with court approval if the board declines to hold one.
"We concluded that under the current board composition, it is difficult to expect the fiduciary duty to all shareholders to be properly fulfilled in this tender offer and the resulting change in control, and so we requested a special shareholder meeting," said Align Partners CEO Lee Chang-hwan. "As a shareholder of Gabia, we will make every effort to protect the interests of all shareholders."
