Gabia, a cloud and IT infrastructure company, launched a tender offer from May 21 to September 17 at 48,000 won per share in partnership with Macquarie Asset Management to delist and resolve its dual-listing structure. Macquarie will acquire the 24.4% stake held by Gabia co-CEO Kim Hong-guk and affiliates, then purchase remaining shares from general shareholders at the same price. This marks the first case in South Korea where a parent company pursues delisting to simplify a conglomerate structure, but activist funds holding significant stakes are challenging both the offer price and procedural fairness.
Macquarie and Gabia Structure 48,000 Won Tender Offer
According to investment banking sources on May 22, Gabia is conducting a tender offer for its shares at 48,000 won per share from May 21 to September 17 in partnership with Macquarie Asset Management. Under this structure, Macquarie will acquire the 24.4% stake held by Gabia co-CEO Kim Hong-guk and special related parties, then purchase shares from general shareholders at the identical price.
Gabia and Macquarie stated the tender offer's purpose as "resolving dual-listing and simplifying the listing structure." Gabia holds listed KOSDAQ subsidiaries including KINX (internet data center business), SP Soft, and Xgate, along with multiple unlisted affiliates such as Gabia CNS, Nolmeongsimong, and Whois.
Gabia Becomes First Parent Company to Pursue Delisting
The investment banking industry evaluates this transaction as the first case of resolving dual-listing structure through parent company delisting. While delisting or merging subsidiaries is commonly discussed, Gabia chose a different approach. The decision appears to consider that as a holding company with multiple listed subsidiaries, Gabia trades at a discount, making the tender offer relatively cost-effective while keeping open the possibility of future IPOs for other affiliates.
An investment banking industry official stated, "Mid-sized companies and KOSDAQ-listed firms had been examining such transaction structures even before guideline announcements," adding, "As financial authorities place importance on procedural legitimacy regarding whether minority shareholders were sufficiently persuaded during the delisting process, the tender offer price and decision-making process will be key."
Activist Funds Challenge Tender Offer Price and Process
Existing activist investors including Align Partners and Merry Capital Management are raising issues with both the tender offer price and procedures. Align Partners, holding a 14.3% stake in Gabia, immediately issued a statement on May 20 when the tender offer was announced, demanding an official response from Gabia's board of directors by May 31.
Align Partners requested explanations regarding: exploration of potential acquisition candidates offering more favorable terms; verification of tender offer price fairness; establishment of an independent special committee; information provision process to the acquirer; and conflicts of interest. The fund noted that although Macquarie is conducting a tender offer for all outstanding shares, CEO Kim and others will reinvest their sale proceeds to jointly manage the company with Macquarie going forward.
Align Partners stated, "This is substantially a going-private transaction by the controlling shareholder, raising significant structural conflict-of-interest concerns," adding, "Stricter procedures are required to protect general shareholders' interests compared to typical third-party M&A."
Merry Capital Management, a US-based investment firm, also released an open letter on May 22. Merry Capital holds 24.2% of Gabia shares and over 15% of KINX shares. Merry Capital directly criticized the tender offer price as excessively low, stating, "The tender offer price significantly undervalues Gabia's corporate value," and claiming, "The share price should be at least 66,200 won considering global peer company trading multiples."
An investment industry official commented, "Minority shareholder opposition is the biggest variable in delistings. While individual shareholders typically find it difficult to coordinate opinions, activist investors hold substantial stakes in this case," adding, "The tender offer's success or failure and subsequent negotiation process may unfold differently from previous delisting cases."
FAQ
Q: What price is Gabia offering in its tender offer from May 21 to September 17?
A: Gabia is conducting a tender offer at 48,000 won per share in partnership with Macquarie Asset Management. Macquarie will acquire CEO Kim Hong-guk's 24.4% stake and purchase remaining shares from general shareholders at the same price.
Q: Why are activist funds opposing Gabia's delisting tender offer?
A: Align Partners (14.3% stake) is challenging the procedural fairness and demanding verification of price fairness by May 31, citing conflict-of-interest concerns since CEO Kim will reinvest proceeds to jointly manage with Macquarie. Merry Capital (24.2% stake) claims the 48,000 won price significantly undervalues the company, asserting fair value should be at least 66,200 won based on global peer multiples.
Q: How does Gabia's delisting approach differ from typical dual-listing resolutions?
A: This marks the first case where a parent company pursues delisting to resolve dual-listing structure, rather than delisting or merging subsidiaries. Investment banking sources note this approach is cost-effective since Gabia trades at a holding company discount, while preserving future IPO options for other affiliates like KINX, SP Soft, and Xgate.
