This article was posted on 21/11/2022 at 18:51
thebell This is an article published in
“Comprehensive stock exchange has nothing to do with the succession of the majority shareholder’s stake, and there is no conflict of interest between the general shareholder and the major shareholder.” This is what Meritz Financial Group Vice Chairman Kim Yong-beom said while announcing a comprehensive stock exchange plan in which Meritz Financial Group would incorporate Meritz Fire & Marine Insurance and Meritz Securities into wholly subsidiaries.
On the 21st, Meritz Financial Group Vice Chairman Kim Yong-beom said in a conference call, “Chairman Jo Jeong-ho of Meritz Financial Group has made it clear in the past that he will not take over the business.”
Meritz Financial Group expects three major effects from this decision. Vice Chairman Kim Yong-beom said, “Quick decision-making has become important to actively respond to changes in the volatile financial environment, and we made this decision to generate stable profits and efficiently distribute group capital.”
Vice Chairman Kim Yong-beom emphasized ‘capital relocation’ while explaining specific expected effects. Vice-Chairman Kim mentioned the time difference within the group, saying, “I have been aware of the inefficiency of capital while managing the holding company.”
Vice Chairman Kim said, “When trying to invest profits generated by Meritz Fire & Marine Insurance through Meritz Securities, since the holding company, fire and securities companies are all listed companies, it may take up to six It may take months,” he said. “In the meantime, good investment opportunities are lost.”
In the same context, if Meritz Securities and Meritz Fire & Marine Insurance are incorporated as wholly subsidiaries under the holding company, internal communication between affiliates can be accelerated. Vice Chairman Kim added, “Since each company is a listed company, it is necessary to check compliance in advance even in communication between executives and employees.”
During the conference call that day, questions and answers were also exchanged about whether the stock exchange was related to the succession of the majority shareholder’s stake. Regarding this, Vice Chairman Kim said, “The comprehensive stock exchange has nothing to do with the succession of the majority shareholder’s shares.” In the past, Meritz Financial Group Chairman Cho Jung-ho made it clear that he would not take over the business.
Vice Chairman Kim identified this point as an important issue and made it clear that there is no conflict of interest between general shareholders and major shareholders regarding stock prices. In other words, “one major shareholder and one individual shareholder are the same.”
In particular, Vice Chairman Kim confirmed the fact by revealing the results of pre-calculating Chairman Cho Jung-ho’s stake in each scenario. Currently, Chairman Cho Jung-ho’s stake in Meritz Financial Holdings is 79%, and if he succeeds to the stake, the stake will be 37% after paying taxes. In the case of a comprehensive stock swap, Chairman Cho’s stake becomes 47%, and after paying taxes related to the stock swap, less than 20% of the stake remains. It is explained that the decision to exchange shares significantly weakens management rights.
An explanation of the timing of the stock exchange was also followed. Vice Chairman Kim said, “The combined net profit of Meritz Securities and Meritz Fire & Marine Insurance was 1.43 trillion won last year and 1.36 trillion won by the third quarter of this year, so I thought we had comprehensive stock exchange capabilities.”
First of all, Meritz Securities’ average exchange rate over the past year and this time’s confirmed rate are the same, so there is no advantage or disadvantage according to stock price trends. In addition, Meritz Financial Group explained that there was a judgment that it was possible to offset some of the premium decline through a strengthened shareholder return rate and management efficiency improvement.
Vice Chairman Kim said, “Meritz Fire & Marine Insurance and Meritz Securities show opposite net profit trends regarding interest rates. Combining the two can reduce the volatility of net profit and increase management efficiency.” There will be,” he predicted.
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