Korea’s Largest IB
Shareholders of Mirae Asset Daewoo Securities Co., former Daewoo Securities and Mirae Asset Securities Co. voted to approve the merger of the two companies on November 4, clearing the final hurdle to become the country’s largest securities company.
The two companies held an extraordinary meeting of shareholders, each, at the headquarters in Yeouido and Eulji-ro, Seoul, on the 4th and more than two-thirds of participating shareholders separately approved the merger of the two. The merged entity would be named Mirae Asset Daewoo.
When the merger of the two asset management firms is completed on December 29 as scheduled, it will generate the country's biggest securities firm in terms of capital that can compete with global investment banks. The equity capital of the combined company will reach 6.7 trillion won (US$5.85 billion), far surpass NH Investment & Securities with 4.5 trillion won (US$3.93 billion and KB and Hyundai Securities to be merged next year with 3.8 trillion won (US$3.32 billion).
Although the merged entity has the largest capital in the nation, its figure is still the 12th largest in Asia. Accordingly, industry sources point out that the company should grow in size further through more aggressive M&A deals in order to jump into a global leading investment bank.
However, the size of claims for stock purchase to be made from the 7th to 17th can be a challenge to Mirae Asset Daewoo. The claim for stock purchase is the right of shareholders, who oppose a merger, to ask a company to buy their stocks back. Consequently, when the share prices are lower than the price of claim for purchase and a large number of shareholders exercise the right, the company can face greater challenges.
The National Pension Service (NPS), the second largest shareholder of the two companies, expressed its objection to the merger on the 2nd considering the claims for stock purchase. The NPS, which abstained in the vote at the shareholders meeting, will decide whether or not to exercise the claim after watching the two companies’ stock prices until the closing date of claims on 17th. When the NPS exercise all the claims for stock purchase, the two companies need to spend 450 billion won (US$393.01 million). On the same day, Mirae Asset Securities shares ended at 22,800 won (US$19.91), up 4.83 percent, while Mirae Asset Daewoo Securities shares ended at 7,770 won (US$6.79), up 3.05 percent, from the previous session. However, the figures are lower than the price of claim for purchase of 23,328 won (US$20.37) and 7,999 won (US$6.99).