Shinsegae Food must establish special committee to protect minority shareholders in relation to Emart's tender offer
The resolution for the comprehensive exchange of shares should be subject to the majority of the minority (MoM) approval process at the general shareholder meeting
Fairness of Emart's Shinsegae Food tender offer at 0.59x book is questionable as CHUNG Yongjin controls both Emart and Shinsegae Food; we doubt the newly introduced director’s duty of loyalty to shareholders was applied and call for a shift away from outdated corporate practices
We urge Shinsegae Food to form an independent special committee of independent directors to scrutinize the fairness of E-mart's buyout offer price and shareholder protection. This committee should hire financial and legal advisors and issue a formal opinion on their review
To ensure equitable treatment of all shareholders, the upcoming vote on the share exchange should require a majority of minority (MoM) approval to prevent the controlling shareholder from unilateral decision-making
With the government's push to prioritize 'fair value' over 'market price' in the amended Capital Markets Act, the valuation for Shinsegae Food's share exchange is under intense scrutiny. A lack of transparency and failure to protect minority interests could lead to substantial financial damages for those accepting the tender offer. Shinsegae Food’s board must realize that neglecting these duties in the current regulatory climate exposes individual directors to serious accountability and litigation risks.
Emart launched a tender offer for Shinsegae Food on December 16th, 2025, aimed at taking the company private. Per the official tender offer filings, the transaction is structured as a two-step acquisition: a public buyback followed by a comprehensive share exchange to secure 100% ownership and subsequent delisting.
A controlling shareholder-led tender offer aimed at delisting, followed by a comprehensive share exchange, represents a textbook case of an interested party. While the controlling shareholder is incentivized to minimize the tender offer price to maximize capital gains, he/she simultaneously possesses significant influence over stock price formation. Furthermore, Chairman CHUNG in this case holds asymmetric information regarding corporate value and future prospects compared to minority shareholders and maintains the exclusive power to time the transaction to his advantage.
Emart has set the tender offer price at W48,120 per share - a staggering discount that puts the PBR at just 0.59x. With a PER of 7.84x and an EV/EBITDA of 4.59x, the offer is fundamentally lowballing investors. Offering only 0.59x the book value fails any reasonable test of fairness for a buyout, in our view.
Even by Emart’s own admissions in the tender offer filings, Shinsegae Food has been in a state of 'structural undervaluation.' The market has applied a 'chronic discount' to the sector, with the company consistently 'trading at a discount to its intrinsic value.' For an extended period, the stock has suffered from a deep-value trap with a PBR below 0.5x (0.48x at year-end 2024 and 0.49x at the end of Q3 2025). Consequently, a mere 20% premium over the pre-announcement closing price is unlikely to rectify this fundamental decoupling of market price from intrinsic value.
Shinsegae Food’s claims of robust shareholder return face scrutiny thanks to a widening gap between business fundamentals and actual payouts. Excluding the 2020 anomaly (due the COVID), Shinsegae Food has maintained stable operating profit exceeding W20 billion. Against that backdrop, the W2.9 billion and W3.5 billion distributed in 2023 and 2024, respectively, represent a lackluster commitment to capital returns. The pushback is intensified by management's perceived 'radio silence' on the IR front and its failure to participate in the 'value-up' program.
The Shinsegae Food’s board must recognize that a delisting-motivated buyback and subsequent share swap is the 'last opportunity' for minority shareholders to capture investment gains. Consequently, directors have a fiduciary duty to negotiate the most favorable terms possible for minority shareholders. Unlike other corporate actions, these transactions leave no room for broad 'managerial discretion'; valuation is the only metric that matters for protecting shareholder interests.
While determining fair price is inherently difficult, governance standards address this through rigorous procedural safeguards. In transactions involving potential conflicts of interest, the benchmark for fulfilling a director's duty of loyalty is clear: set up an independent special committee to negotiate the deal, hire outside experts to verify the numbers, and submit the final proposal to a majority of the minority vote. These steps are the proven mechanism for ensuring that fair value is actually achieved.
Following the introduction of the director’s duty of loyalty to shareholders in the Commercial Act past July, our Forum urges Shinsegae Food to immediately establish a special committee (composed of independent directors). Recognizing that directors Chun and Kim are former tax officials and director Han is a scholar of industrial relations, they may lack expertise and knowledge. Therefore, the special committee must engage independent financial advisors and legal counsel to rigorously scrutinize the fairness of the tender offer price and the adequacy of shareholder protection measures. Upon completion of this review, the committee should promptly issue a Statement of Opinion in accordance with Article 138 of the Capital Markets Act. Finally, the resolution for the comprehensive share exchange must be subject to a 'majority of the minority’ approval process at the shareholder meeting.
Emart has indicated it will proceed with a comprehensive share exchange for Shinsegae Food on the fastest legal timeline following the tender offer. However, recent reports suggest that the government and the ruling party are set to pass an amendment to the Capital Markets Act that mandates the use of 'fair value' rather than 'market price' for such transactions. Historically, the exchange price in delisting scenarios mirrored the tender offer price because market prices typically converged around that offer. However, if this amendment is enacted in the near future, a significant decoupling could occur between the tender offer price and the statutory exchange price - especially since fair value is expected to reflect, at a minimum, the company’s book value. Boards must provide transparent information to avoid causing substantial losses to minority shareholders who tender prematurely. Failure to exercise due diligence in determining a fair price could expose directors to severe legal and fiduciary liability, in our opinion.
We urge the financial authorities to rigorously review the tender offer statement for both substantive accuracy and procedural fairness to determine if a corrective disclosure (amendment) should be mandated to protect minority shareholders. Furthermore, we call upon the authorities to establish detailed regulatory benchmarks to prevent future instances of 'lowball' tender offers from inflicting financial harm on general investors in similar corporate transactions.
Despite the codification of directors' duty of loyalty to shareholders through the Commercial Act amendment in July 2025, recent tender offers for voluntary delisting continue to mirror outdated, controversial practices that raise questions of fairness. Establishing the principle of a duty of loyalty to shareholders requires more than just legislative reform; it necessitates the formation of sound market practices during this critical introductory phase. As an industry leader, Shinsegae Group should set a benchmark for excellence in corporate governance at this pivotal moment.
December 22nd, 2025
Korean Corporate Governance Forum
Chairman, Namuh Rhee
Vice Chairman, Hyeseop Sim
Shinsegae Food must establish special committee to protect minority shareholders in relation to Emart's tender offer
The resolution for the comprehensive exchange of shares should be subject to the majority of the minority (MoM) approval process at the general shareholder meeting
Fairness of Emart's Shinsegae Food tender offer at 0.59x book is questionable as CHUNG Yongjin controls both Emart and Shinsegae Food; we doubt the newly introduced director’s duty of loyalty to shareholders was applied and call for a shift away from outdated corporate practices
We urge Shinsegae Food to form an independent special committee of independent directors to scrutinize the fairness of E-mart's buyout offer price and shareholder protection. This committee should hire financial and legal advisors and issue a formal opinion on their review
To ensure equitable treatment of all shareholders, the upcoming vote on the share exchange should require a majority of minority (MoM) approval to prevent the controlling shareholder from unilateral decision-making
With the government's push to prioritize 'fair value' over 'market price' in the amended Capital Markets Act, the valuation for Shinsegae Food's share exchange is under intense scrutiny. A lack of transparency and failure to protect minority interests could lead to substantial financial damages for those accepting the tender offer. Shinsegae Food’s board must realize that neglecting these duties in the current regulatory climate exposes individual directors to serious accountability and litigation risks.
Emart launched a tender offer for Shinsegae Food on December 16th, 2025, aimed at taking the company private. Per the official tender offer filings, the transaction is structured as a two-step acquisition: a public buyback followed by a comprehensive share exchange to secure 100% ownership and subsequent delisting.
A controlling shareholder-led tender offer aimed at delisting, followed by a comprehensive share exchange, represents a textbook case of an interested party. While the controlling shareholder is incentivized to minimize the tender offer price to maximize capital gains, he/she simultaneously possesses significant influence over stock price formation. Furthermore, Chairman CHUNG in this case holds asymmetric information regarding corporate value and future prospects compared to minority shareholders and maintains the exclusive power to time the transaction to his advantage.
Emart has set the tender offer price at W48,120 per share - a staggering discount that puts the PBR at just 0.59x. With a PER of 7.84x and an EV/EBITDA of 4.59x, the offer is fundamentally lowballing investors. Offering only 0.59x the book value fails any reasonable test of fairness for a buyout, in our view.
Even by Emart’s own admissions in the tender offer filings, Shinsegae Food has been in a state of 'structural undervaluation.' The market has applied a 'chronic discount' to the sector, with the company consistently 'trading at a discount to its intrinsic value.' For an extended period, the stock has suffered from a deep-value trap with a PBR below 0.5x (0.48x at year-end 2024 and 0.49x at the end of Q3 2025). Consequently, a mere 20% premium over the pre-announcement closing price is unlikely to rectify this fundamental decoupling of market price from intrinsic value.
Shinsegae Food’s claims of robust shareholder return face scrutiny thanks to a widening gap between business fundamentals and actual payouts. Excluding the 2020 anomaly (due the COVID), Shinsegae Food has maintained stable operating profit exceeding W20 billion. Against that backdrop, the W2.9 billion and W3.5 billion distributed in 2023 and 2024, respectively, represent a lackluster commitment to capital returns. The pushback is intensified by management's perceived 'radio silence' on the IR front and its failure to participate in the 'value-up' program.
The Shinsegae Food’s board must recognize that a delisting-motivated buyback and subsequent share swap is the 'last opportunity' for minority shareholders to capture investment gains. Consequently, directors have a fiduciary duty to negotiate the most favorable terms possible for minority shareholders. Unlike other corporate actions, these transactions leave no room for broad 'managerial discretion'; valuation is the only metric that matters for protecting shareholder interests.
While determining fair price is inherently difficult, governance standards address this through rigorous procedural safeguards. In transactions involving potential conflicts of interest, the benchmark for fulfilling a director's duty of loyalty is clear: set up an independent special committee to negotiate the deal, hire outside experts to verify the numbers, and submit the final proposal to a majority of the minority vote. These steps are the proven mechanism for ensuring that fair value is actually achieved.
Following the introduction of the director’s duty of loyalty to shareholders in the Commercial Act past July, our Forum urges Shinsegae Food to immediately establish a special committee (composed of independent directors). Recognizing that directors Chun and Kim are former tax officials and director Han is a scholar of industrial relations, they may lack expertise and knowledge. Therefore, the special committee must engage independent financial advisors and legal counsel to rigorously scrutinize the fairness of the tender offer price and the adequacy of shareholder protection measures. Upon completion of this review, the committee should promptly issue a Statement of Opinion in accordance with Article 138 of the Capital Markets Act. Finally, the resolution for the comprehensive share exchange must be subject to a 'majority of the minority’ approval process at the shareholder meeting.
Emart has indicated it will proceed with a comprehensive share exchange for Shinsegae Food on the fastest legal timeline following the tender offer. However, recent reports suggest that the government and the ruling party are set to pass an amendment to the Capital Markets Act that mandates the use of 'fair value' rather than 'market price' for such transactions. Historically, the exchange price in delisting scenarios mirrored the tender offer price because market prices typically converged around that offer. However, if this amendment is enacted in the near future, a significant decoupling could occur between the tender offer price and the statutory exchange price - especially since fair value is expected to reflect, at a minimum, the company’s book value. Boards must provide transparent information to avoid causing substantial losses to minority shareholders who tender prematurely. Failure to exercise due diligence in determining a fair price could expose directors to severe legal and fiduciary liability, in our opinion.
We urge the financial authorities to rigorously review the tender offer statement for both substantive accuracy and procedural fairness to determine if a corrective disclosure (amendment) should be mandated to protect minority shareholders. Furthermore, we call upon the authorities to establish detailed regulatory benchmarks to prevent future instances of 'lowball' tender offers from inflicting financial harm on general investors in similar corporate transactions.
Despite the codification of directors' duty of loyalty to shareholders through the Commercial Act amendment in July 2025, recent tender offers for voluntary delisting continue to mirror outdated, controversial practices that raise questions of fairness. Establishing the principle of a duty of loyalty to shareholders requires more than just legislative reform; it necessitates the formation of sound market practices during this critical introductory phase. As an industry leader, Shinsegae Group should set a benchmark for excellence in corporate governance at this pivotal moment.
December 22nd, 2025
Korean Corporate Governance Forum
Chairman, Namuh Rhee
Vice Chairman, Hyeseop Sim