FSS Orders Doosan Group to Resubmit the Merger Plan - "Merger Plan Is Not Illegal, But Is It Fair?"

• On 24 July, the Financial Supervisory Service (FSS) ordered the Doosan Group to resubmit the merger plan.

• It is rare for FSS to reject companies' merger reports but there has been an exception this time since this deal is egregiously negative to many minority investors.

• Doosan Group needs to resubmit a revised merger plan within next three months. Otherwise, the securities report involving the merger plan of the Doosan Group companies will be considered withdrawn.

On 24 July, the Financial Supervisory Service (FSS) ordered the Doosan Group to resubmit the merger plan. The major reason for this was because the initial merger plan submitted by the Doosan Group was evaluated as not contributing to the Corporate Value Up program.In fact, some of the local media mentioned that Doosan Group's merger plan was more akin to a "Value Kill" program, rather than a "Value Up" program.

It is rare for the FSS to reject companies' merger reports but the FSS has taken an exception this time since it appears that the Doosan Group's merger plan is egregiously negative to many minority investors. The FSS mentioned that Doosan's merger report did not properly include/record material important relevant in this merger. Requests for corrections are rarer in the case of mergers and comprehensive stock swaps than for new listings.

Therefore, the FSS has requested Doosan Group to resubmit a revised securities report including more important/material information related to the merger/split/delisting involving Doosan Enerbility (034020 KS), Doosan Robotics (454910 KS), and Doosan Bobcat Inc (241560 KS).

According to the Capital Markets Act, if the merger securities report is not properly completed on items such as (if there is a false statement or indication regarding important matters, if there is a false statement or indication regarding important matters, if the contents of the description or indication of important matters are unclear), the FSS may request correction from the company and resubmit the securities report.

As a result of the FSS's decision to order Doosan Group to resubmit the merger plan, the Doosan Group needs to resubmit a revised merger plan within the next three months. Otherwise, the securities report involving the merger plan of the Doosan Group companies will be considered withdrawn.

Photo by ZHENYU LUO on Unsplash

Merger Plan is Not Illegal, But Is It Fair?

A key aspect of the FSS's rare decision involving the Doosan Group companies merger/split/delisting is that although they are not illegal, are they fair? (especially from the point of view of Doosan Enerbility and Doosan Bobcat shareholders)