Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<p>GS Retail merger swap with GS Home Shopping is still in progress. It is a stock swap. The GS Home Shopping shareholders will get 4.22368 GS Retail shares for each GS Home Shopping share.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Overview (₩B)"}'>Overview (₩B)</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Type"}'>Type</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Stock swap"}'>Stock swap</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Acquirer"}'>Acquirer</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"GS Retail Co Ltd"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>GS Retail Co Ltd (007070)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target company"}'>Target company</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"GS Home Shopping Inc."}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>GS Home Shopping Inc. (028150)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering price"}'><strong>Swap price for GS Retail</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33800}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>₩33,800</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target price"}'><strong>Swap price for GS Home Shopping</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":142762}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>₩142,762</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap ratio"}'><strong>Swap ratio</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4.2236834}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}'><strong>4.2236834</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><div>
<p>May 28 is the big day to ger shareholder approval for the merger. Stock repurchase right exercise will proceed on May 28 to June 17.</p>
<p>Of course, it is only for those who purchased the shares before November 11 last year. But stock swap arb trade? Everyone can do it any time from now until the trade suspension begins June 29.</p>
<table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Timetable"}' data-sheets-note="Sang Hyun Park: We have to buy shares until BOD+1 to be eligible to receive stock purchase rights. We then have to notify our dissenting opinion until the end of dissenting opinion notice period.">Timetable</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dissenting opinion notice begins"}'>Dissenting opinion notice</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44329}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>5. 13 ~ 27</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EGM"}'><strong>EGM</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44344}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>5. 28</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stock purchase right exercise begins"}'><strong>Stock purchase right exercise</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44344}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>5. 28 ~ 6. 17</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension begins - GS Home Shopping"}'>Trade suspension (GS Home Shopping)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44376}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>6. 29 ~ 7. 15</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'><strong>Listing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44393}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>7. 16</strong></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div>

GS Retail merger swap with GS Home Shopping is still in progress. It is a stock swap. The GS Home Shopping shareholders will get 4.22368 GS Retail shares for each GS Home Shopping share.





Overview (₩B)

Type
Stock swap


Acquirer
GS Retail Co Ltd (007070)


Target company
GS Home Shopping Inc. (028150)


Swap price for GS Retail
₩33,800


Swap price for GS Home Shopping
₩142,762


Swap ratio
4.2236834

Source: DART


May 28 is the big day to ger shareholder approval for the merger. Stock repurchase right exercise will proceed on May 28 to June 17.
Of course, it is only for those who purchased the shares before November 11 last year. But stock swap arb trade? Everyone can do it any time from now until the trade suspension begins June 29.






Timetable

Dissenting opinion notice
5. 13 ~ 27


EGM
5. 28


Stock purchase right exercise
5. 28 ~ 6. 17


Trade suspension (GS Home Shopping)
6. 29 ~ 7. 15


Listing
7. 16

Source: DART




GS Retail Merger Swap Arb Trade Begins This Monday

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight"><p>In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the ban on the short selling of shares in Korea in May. In this insight, we highlight 26 pair trades that involve Korean holdcos and opcos.</p></div><p>Just a reminder that the ban on short selling of KOSPI 200 and KOSDAQ 150 included stocks will remain in place until May 2nd and investors will be able to resume their shorting on these 350 stocks starting on May 3rd. Once this ban on short selling of stocks ends, there could be more investors that may look to add to the holdco shares and short the opco shares (especially among the pairs where the holdco shares have underperformed the opco shares in the past year). However, some of these moves have already started to take place in the past few weeks, which could reduce the overall profits on the pair trades. </p><p>Traditionally, the pair trades involving Korean holdcos and opcos have been a trading strategy that many hedge funds have employed for many years. However, the ban on short selling of stocks in Korea have prevented many of these funds from employing these pair trade strategies. Once the ban ends, you will likely see these funds becoming more active in these trading methods once again. </p><div class="content-highlight">
<p>In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past year. Of the 26 pair trade strategies mentioned in this insight, this section I involves 19 of them (73% of total). The section II (which involve holdcos outperforming the opcos in the past year) involves 7 pair trade strategies (27% of total).</p>
<p>In other words, the opcos in general have vastly outperformed the holdcos in the past year, especially due to the ban on the short selling of stocks in Korea. Because the opcos tend to be the bigger company than the holdcos in terms of market cap, many fund managers (both active and passive) have tended to just invest in the opcos and pay less attention to the holdcos.  </p>
</div><p>Also, we described the holdcos as either regular or quasi. SK Telecom and Samsung C&amp;T would be examples of "quasi" holdcos whereas Orion Holdings and Hanjin Kal would be examples of regular holdcos. </p>

In this insight, we highlight the closing of the pricing gaps between the major Korean holdcos and opcos, especially with the upcoming end of the ban on the short selling of shares in Korea in May. In this insight, we highlight 26 pair trades that involve Korean holdcos and opcos.Just a reminder that the ban on short selling of KOSPI 200 and KOSDAQ 150 included stocks will remain in place until May 2nd and investors will be able to resume their shorting on these 350 stocks starting on May 3rd. Once this ban on short selling of stocks ends, there could be more investors that may look to add to the holdco shares and short the opco shares (especially among the pairs where the holdco shares have underperformed the opco shares in the past year). However, some of these moves have already started to take place in the past few weeks, which could reduce the overall profits on the pair trades. Traditionally, the pair trades involving Korean holdcos and opcos have been a trading strategy that many hedge funds have employed for many years. However, the ban on short selling of stocks in Korea have prevented many of these funds from employing these pair trade strategies. Once the ban ends, you will likely see these funds becoming more active in these trading methods once again. 
In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past year. Of the 26 pair trade strategies mentioned in this insight, this section I involves 19 of them (73% of total). The section II (which involve holdcos outperforming the opcos in the past year) involves 7 pair trade strategies (27% of total).
In other words, the opcos in general have vastly outperformed the holdcos in the past year, especially due to the ban on the short selling of stocks in Korea. Because the opcos tend to be the bigger company than the holdcos in terms of market cap, many fund managers (both active and passive) have tended to just invest in the opcos and pay less attention to the holdcos.  
Also, we described the holdcos as either regular or quasi. SK Telecom and Samsung C&amp;T would be examples of "quasi" holdcos whereas Orion Holdings and Hanjin Kal would be examples of regular holdcos. 

Closing the Gap: Korean Holdcos Vs. Opcos

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Equity Bottom-Up

<div>While the details are scarce, local press is reporting that SKT and AMZN has been in talks for more than a year and would allow really an export/import biz on both of their channels (ie Korean products to be bought by US consumers and US products to be bought thru 11th St (SK's ecommerce portal) for Koreans. </div><div></div><div>This can't be good for the ecommerce players in Korea.  In the US, if you hear that AMZN is coming in whatever business, the whole sector falls.   Is Naver next? </div>

While the details are scarce, local press is reporting that SKT and AMZN has been in talks for more than a year and would allow really an export/import biz on both of their channels (ie Korean products to be bought by US consumers and US products to be bought thru 11th St (SK's ecommerce portal) for Koreans. This can't be good for the ecommerce players in Korea.  In the US, if you hear that AMZN is coming in whatever business, the whole sector falls.   Is Naver next? 

AMZN into Korea - "We Are Not Here to Take Part, We're Here to Take Over!"

<div class="content-highlight"><p>In this insight, we provide a sum-of-the-parts (SoTP) valuation analysis of <a href="https://www.smartkarma.com/entities/gs-holdings" target="_blank" data-smartkarma-citation="entities:18524:1" rel="noopener">Gs Holdings (078930 KS)</a>. <strong>Our SoTP valuation analysis suggests a target price of 50,783 won per share for GS Holdings, representing a 34% upside from the current levels. We are including GS Holdings in our model portfolio. </strong></p></div><p>The SoTP valuation is broken down into 5 major components:</p><p style="padding-left: 25px;"><strong>A) Value of Public Companies (2.1 trillion won)</strong></p><p style="padding-left: 25px;"><strong>B) Value of Private Companies (3.2 trillion won) </strong></p><p style="padding-left: 25px;"><strong>C) Value of GS Holdings' Core Business (1.5 trillion won) </strong></p><p style="padding-left: 25px;"><strong>D) Net Debt (571 billion won)</strong></p><p style="padding-left: 25px;"><strong>E) Holdco Discount (25%)</strong></p><div class="content-highlight">
<p>The three key catalysts of GS Holdings are as follows:</p>
<ul>
<li>The merger between GS Retail and GS Home Shopping</li>
<li>Insiders have been actively buying shares of GS Holdings in 2020</li>
<li>Turnaround of the GS Energy business in 2021</li>
</ul>
</div>

In this insight, we provide a sum-of-the-parts (SoTP) valuation analysis of Gs Holdings (078930 KS). Our SoTP valuation analysis suggests a target price of 50,783 won per share for GS Holdings, representing a 34% upside from the current levels. We are including GS Holdings in our model portfolio. The SoTP valuation is broken down into 5 major components:A) Value of Public Companies (2.1 trillion won)B) Value of Private Companies (3.2 trillion won) C) Value of GS Holdings' Core Business (1.5 trillion won) D) Net Debt (571 billion won)E) Holdco Discount (25%)
The three key catalysts of GS Holdings are as follows:

The merger between GS Retail and GS Home Shopping
Insiders have been actively buying shares of GS Holdings in 2020
Turnaround of the GS Energy business in 2021



GS Holdings SoTP Valuation Analysis & Three Key Catalysts

<p>GS announced a merger of Retail (007070) and Home Shopping (028150) at a swap ratio of 4.2236834.</p><p>GS Holdings (078930) owns both subsidiaries.</p><p>They set the purchase right ceiling at <strong>₩350B</strong><strong>combined</strong>, about 8% of the combined MC.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Overview (₩B)"}'>Overview (₩B)</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Type"}'>Type</td>
<td data-sheets-value='{"1":2,"2":"Stock swap"}'>Stock swap</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Acquirer"}'>Acquirer</td>
<td data-sheets-value='{"1":2,"2":"GS Retail Co Ltd"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>GS Retail Co Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ticker"}'>- Ticker</td>
<td data-sheets-value='{"1":2,"2":"007070"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='="007070"'>007070</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - SO"}'>- SO</td>
<td data-sheets-value='{"1":3,"3":77000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='=googlefinance(R[-1]C[0], "shares")'>77,000,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target company"}'>Target company</td>
<td data-sheets-value='{"1":2,"2":"GS Home Shopping Inc."}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>GS Home Shopping, Inc.</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ticker"}'>- Ticker</td>
<td data-sheets-value='{"1":2,"2":"028150"}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}' data-sheets-formula='="028150"'>028150</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - SO"}'>- SO</td>
<td data-sheets-value='{"1":3,"3":6562500}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='=googlefinance(R[-1]C[0], "shares")'>6,562,500</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering share type"}'>Offering share type</td>
<td data-sheets-value='{"1":2,"2":"Acquirer ordinary share"}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'>Acquirer ordinary share</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering price"}'>Offering price</td>
<td data-sheets-value='{"1":3,"3":33800}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩33,800</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering volume"}'>Offering volume</td>
<td data-sheets-value='{"1":3,"3":27717922.312499996}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=sum(R[1]C[0]:R[2]C[0])">27,717,922</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Treasury"}'>- Treasury</td>
<td data-sheets-value='{"1":3,"3":2530831.0932799997}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=599200*R[7]C[0]">2,530,831</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ordinary"}'>- Ordinary</td>
<td data-sheets-value='{"1":3,"3":25187091.219219998}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[4]C[0]*R[6]C[0]-R[-1]C[0]">25,187,091</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering value"}'>Offering value</td>
<td data-sheets-value='{"1":3,"3":936.8657741624999}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}' data-sheets-formula="=R[-4]C[0]*R[-3]C[0]/1000000000">936.9</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target share type"}'>Target share type</td>
<td data-sheets-value='{"1":2,"2":"Target company ordinary share"}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'>Target company ordinary share</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target price"}'>Target price</td>
<td data-sheets-value='{"1":3,"3":142762}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩142,762</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target volume"}'>Target volume</td>
<td data-sheets-value='{"1":3,"3":6562500}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-9]C[0]">6,562,500</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - % of SO"}'>- % of SO</td>
<td data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-10]C[0]">100.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Swap ratio"}'><strong>Swap ratio</strong></td>
<td data-sheets-value='{"1":3,"3":4.2236834}' data-sheets-numberformat='{"1":2,"2":"#,##0.0000000","3":1}'><strong>4.2236834</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stock purchase ceiling condition"}'><strong>Stock purchase ceiling condition</strong></td>
<td data-sheets-value='{"1":2,"2":"If exceeds for both combined"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>If exceeds for both combined</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Amount"}'><strong>- Amount</strong></td>
<td data-sheets-value='{"1":3,"3":350}' data-sheets-numberformat='{"1":2,"2":"#,##0.0"}'><strong>350.0</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Exercise price - GS Retail Co Ltd"}' data-sheets-formula='="Exercise price - "&amp;R[-19]C[1]'>Exercise price - GS Retail Co Ltd</td>
<td data-sheets-value='{"1":3,"3":34125}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩34,125</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Exercise price - GS Home Shopping Inc."}' data-sheets-formula='="Exercise price - "&amp;R[-17]C[1]'>Exercise price - GS Home Shopping Inc.</td>
<td data-sheets-value='{"1":3,"3":138855}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'>₩138,855</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>For purchase rights, today is the last day to become eligible.</p><p>The ex-rights falls on April 16 next year, followed by the dissenting opinion notice on May 13~27. The shareholder meeting is on May 28.</p><p>The new shares will be listed on July 16.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Timetable"}' data-sheets-note="Sang Hyun Park: We have to buy shares until BOD+1 to be eligible to receive stock purchase rights. We then have to notify our dissenting opinion until the end of dissenting opinion notice period.">Timetable</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"BOD meeting"}'>BOD meeting</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44145}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2020. 11. 10</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Last day to own stock purchase rights"}'><strong>Last day to own stock purchase rights</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44146}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2020. 11. 11</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ex-rights date"}'><strong>Ex-rights date</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44302}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 4. 16</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Record date of shareholder register"}'>Record date - shareholder register</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44305}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 4. 19</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dissenting opinion notice begins"}'>Dissenting opinion notice begins</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44329}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 5. 13</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dissenting opinion notice ends"}'>Dissenting opinion notice ends</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44343}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 5. 27</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EGM"}'><strong>EGM</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44344}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 5. 28</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stock purchase right exercise begins"}'>Stock purchase right exercise begins</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44344}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 5. 28</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stock purchase right exercise ends"}'>Stock purchase right exercise ends</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44364}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 6. 17</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension begins - GS Home Shopping"}'>Trade suspension begins - GS Home Shopping</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44376}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 6. 29</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension ends - GS Home Shopping"}'>Trade suspension ends - GS Home Shopping</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44392}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 15</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: left;" data-sheets-value='{"1":3,"3":44393}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 16</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>GS Holdings retains 36.1% in Home Shopping and 65.8% in Retail.</p><p>I don't see a reason for the NPS to vote against the merger. Combining the NPS and the friendly shareholders (Hanjin), the controlling stake reaches 72% for Retail and 50% for Home Shopping.</p><p>A fierce proxy fight? It is unlikely.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Shareholding - target company"}'>Shareholding - target company (GS Home Shopping)</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"GS Holdings Corp"}' data-sheets-formula='=googlefinance("078930", "name")'><strong>GS Holdings Corp</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.36097523809523807}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=2368900/R8C2"><strong>36.10%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea NPS"}'>Korea NPS</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0500728380952381}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=328603/R8C2">5.01%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bearing Asset Management"}'>Bearing Asset Management</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.05017005714285714}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(301839+25544+1858)/R8C2">5.02%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korean Air Lines Co Ltd"}' data-sheets-formula='=googlefinance("003490", "name")'>Korean Air Lines Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.045008761904761906}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=295370/R8C2">4.50%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hanjin Transportation Co., Ltd."}' data-sheets-formula='=googlefinance("002320", "name")'>Hanjin Transportation Co., Ltd.</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.034991238095238096}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=229630/R8C2">3.50%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.007781818181818181}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=599200/R5C2">0.78%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: FnGuide"}'>Source: FnGuide</td></tr>
</tbody>
</table><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Shareholding - acquirer"}'>Shareholding - acquirer (GS Retail)</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"GS Holdings Corp"}' data-sheets-formula='=googlefinance("078930", "name")'><strong>GS Holdings Corp</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.6575122077922078}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=50628440/R5C2"><strong>65.75%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Special affiliated persons"}'>Special affiliated persons</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.00025974025974025974}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=20000/R5C2">0.03%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Major shareholder"}'>- Major shareholder</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.657771948051948}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=sum(R[-2]C[0]:R[-1]C[0])">65.78%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea NPS"}'>Korea NPS</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.060418987012987015}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=4652262/R5C2">6.04%</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: FnGuide"}'>Source: FnGuide</td></tr>
</tbody>
</table>

GS announced a merger of Retail (007070) and Home Shopping (028150) at a swap ratio of 4.2236834.GS Holdings (078930) owns both subsidiaries.They set the purchase right ceiling at ₩350Bcombined, about 8% of the combined MC.





Overview (₩B)

Type
Stock swap


Acquirer
GS Retail Co Ltd


- Ticker
007070


- SO
77,000,000


Target company
GS Home Shopping, Inc.


- Ticker
028150


- SO
6,562,500


Offering share type
Acquirer ordinary share


Offering price
₩33,800


Offering volume
27,717,922


- Treasury
2,530,831


- Ordinary
25,187,091


Offering value
936.9


Target share type
Target company ordinary share


Target price
₩142,762


Target volume
6,562,500


- % of SO
100.00%


Swap ratio
4.2236834


Stock purchase ceiling condition
If exceeds for both combined


- Amount
350.0


Exercise price - GS Retail Co Ltd
₩34,125


Exercise price - GS Home Shopping Inc.
₩138,855

Source: DART

For purchase rights, today is the last day to become eligible.The ex-rights falls on April 16 next year, followed by the dissenting opinion notice on May 13~27. The shareholder meeting is on May 28.The new shares will be listed on July 16.





Timetable

BOD meeting
2020. 11. 10


Last day to own stock purchase rights
2020. 11. 11


Ex-rights date
2021. 4. 16


Record date - shareholder register
2021. 4. 19


Dissenting opinion notice begins
2021. 5. 13


Dissenting opinion notice ends
2021. 5. 27


EGM
2021. 5. 28


Stock purchase right exercise begins
2021. 5. 28


Stock purchase right exercise ends
2021. 6. 17


Trade suspension begins - GS Home Shopping
2021. 6. 29


Trade suspension ends - GS Home Shopping
2021. 7. 15


Listing
2021. 7. 16

Source: DART

GS Holdings retains 36.1% in Home Shopping and 65.8% in Retail.I don't see a reason for the NPS to vote against the merger. Combining the NPS and the friendly shareholders (Hanjin), the controlling stake reaches 72% for Retail and 50% for Home Shopping.A fierce proxy fight? It is unlikely.





Shareholding - target company (GS Home Shopping)

GS Holdings Corp
36.10%


Korea NPS
5.01%


Bearing Asset Management
5.02%


Korean Air Lines Co Ltd
4.50%


Hanjin Transportation Co., Ltd.
3.50%


Treasury shares
0.78%

Source: FnGuide







Shareholding - acquirer (GS Retail)

GS Holdings Corp
65.75%


Special affiliated persons
0.03%


- Major shareholder
65.78%


Korea NPS
6.04%

Source: FnGuide



GS Retail/Home Shopping Merger Swap: Currently at 3.4% Div-Adj. Spread

South Korea

GS Retail Co., Ltd. operates a chain of retail stores. The Company provides beauty and skincare products, candles, gifts, perfumes, ornaments, bathroom accessories, and other products. GS Retail serves its customers in the Republic of South Korea.

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