MBK Partners and Unison Capital to Defend Incumbent Management
Korea Corporate Governance Improvement (KCGI) announced on Jan. 18 that it had sent a letter to shareholders of Osstem Implant proposing corporate value enhancement through a governance reform.
KCGI purchased a stake in Osstem Implant through Apricot Holdings at the end of 2022 and announced a shareholder action. Apricot Holdings’ stake in Osstem Implant is 6.57 percent, which makes it the third-largest shareholder of the Korean implant giant.
KCGI argued in the letter that Osstem Implant is undervalued due to an outdated governance structure, such as a poor internal control and an inefficient management of subsidiaries and related companies.
“Considering Osstem Implant’s competitiveness, we believe that it has the potential to increase its corporate value by at least two to five times,” KCGI said. “It is possible for the company to increase its market capitalization from two trillion won at the end of 2022 to 10 trillion won.”
Osstem Implant suffered a suspension of stock trading following an employee's embezzlement of company funds. The scandal caused enormous damage to shareholders. KCGI argued that the company still has no plan to improve internal control, with no one at the company paying attention to that matter. It added that the company's lack of internal control has recently been proven by the fines imposed by the Korean Fair Trade Commission for the kickbacks the company offered.
Meanwhile, MBK Partners and Unison Capital plan to obtain about 25 percent of Osstem Implant by purchasing a 10 percent stake from the company’s chairman Choi Kyu-ok, who holds a 20.64 percent stake, and an additional 15 percent through a tender offer. They believe that if chairman Choi and his friendly forces such as MBK secure a 40 percent stake, they will be able to fend off KCGI.