Hyundai Home Shopping is facing a significantly changed business environment surrounding its core operations due to shifts in the media landscape and changes in customer behavior. In addition, while functioning as an intermediate holding company within the group’s governance structure, Hyundai Home Shopping has faced certain constraints in enhancing corporate value, including a subsidiary structure with limited relevance to its core business, potential impairment losses on investment assets, and a structural valuation discount arising from the duplicate listing structure.
In response, Hyundai Home Shopping has continuously pursued shareholder value enhancement through various shareholder return measures, such as dividend increases and treasury share repurchases. However, it was recognized that such self-help measures alone have inherent limitations in fundamentally addressing these structural constraints.
Against this backdrop, Hyundai Home Shopping established a special committee composed entirely of independent directors to independently review long-term growth strategies and measures to enhance shareholder value. With advice from external professional advisors, the committee examined potential improvement measures from both
(i) a business perspective and (ii) a structural perspective.
As a result of this review:
From (i) a business perspective, the committee recognized the need to strengthen competitiveness in brand and distribution businesses while diversifying into sectors with growth potential, including beauty, living, fashion, and senior-friendly industries; and
From (ii) a structural perspective, the committee concluded that transitioning to a non-listed company could reduce listing maintenance costs and regulatory burdens, and that a spin-off separating the operating business and the investment business would enable each segment to focus on its core competencies.
Accordingly, it was determined that a structure in which Hyundai Home Shopping becomes a wholly owned subsidiary of Hyundai G.F. Holdings, followed by a spin-off of the operating and investment businesses and the subsequent integration of the separated investment business into the parent company, could contribute to enhancing long-term corporate value.
In addition, the special committee of Hyundai Home Shopping clearly recognized that the protection of shareholder interests and the enhancement of shareholder value must be a prerequisite for pursuing the comprehensive share exchange. On this basis, the committee proposed a comprehensive share exchange plan to Hyundai G.F. Holdings on the premise of an expanded shareholder return policy.
※ Key prerequisites regarding shareholder returns
① Cancellation of 6.6% of treasury shares currently held by Hyundai Home Shopping;
② KRW 30 billion treasury share buyback and cancellation by Hyundai G.F. Holdings
③ Expansion of the per-share dividend of Hyundai G.F. Holdings to a level equivalent to the existing dividend of Hyundai Home Shopping
(Existing dividend of Hyundai Home Shopping: KRW 2,800 per share ÷ exchange ratio)
Hyundai G.F. Holdings reviewed these proposals through a special committee composed entirely of independent directors and its board of directors, comprehensively considering the dilution impact on existing shareholders arising from the comprehensive share exchange, the effects of expanded shareholder returns, the corporate value enhancement resulting from the resolution of the duplicate listing structure, and the potential for improved capital efficiency at the group level.
As a result, Hyundai G.F. Holdings decided to proceed with the transaction, concluding that—together with improved investment accessibility resulting from an increase in free float—the implementation of a KRW 100 billion treasury share buyback and cancellation, which exceeds the KRW 30 billion buyback and cancellation level initially requested by the special committee of Hyundai Home Shopping, would combine the effects of enhanced shareholder returns and the resolution of the duplicate listing structure of major subsidiaries.
Accordingly, it was determined that both existing shareholders of Hyundai G.F. Holdings and the shareholders of Hyundai Home Shopping who will become shareholders through the comprehensive share exchange would be able to share the mid- to long-term benefits of enhanced shareholder return.
Hyundai Home Shopping is facing a significantly changed business environment surrounding its core operations due to shifts in the media landscape and changes in customer behavior. In addition, while functioning as an intermediate holding company within the group’s governance structure, Hyundai Home Shopping has faced certain constraints in enhancing corporate value, including a subsidiary structure with limited relevance to its core business, potential impairment losses on investment assets, and a structural valuation discount arising from the duplicate listing structure.
In response, Hyundai Home Shopping has continuously pursued shareholder value enhancement through various shareholder return measures, such as dividend increases and treasury share repurchases. However, it was recognized that such self-help measures alone have inherent limitations in fundamentally addressing these structural constraints.
Against this backdrop, Hyundai Home Shopping established a special committee composed entirely of independent directors to independently review long-term growth strategies and measures to enhance shareholder value. With advice from external professional advisors, the committee examined potential improvement measures from both
(i) a business perspective and (ii) a structural perspective.
As a result of this review:
From (i) a business perspective, the committee recognized the need to strengthen competitiveness in brand and distribution businesses while diversifying into sectors with growth potential, including beauty, living, fashion, and senior-friendly industries; and
From (ii) a structural perspective, the committee concluded that transitioning to a non-listed company could reduce listing maintenance costs and regulatory burdens, and that a spin-off separating the operating business and the investment business would enable each segment to focus on its core competencies.
Accordingly, it was determined that a structure in which Hyundai Home Shopping becomes a wholly owned subsidiary of Hyundai G.F. Holdings, followed by a spin-off of the operating and investment businesses and the subsequent integration of the separated investment business into the parent company, could contribute to enhancing long-term corporate value.
In addition, the special committee of Hyundai Home Shopping clearly recognized that the protection of shareholder interests and the enhancement of shareholder value must be a prerequisite for pursuing the comprehensive share exchange. On this basis, the committee proposed a comprehensive share exchange plan to Hyundai G.F. Holdings on the premise of an expanded shareholder return policy.
※ Key prerequisites regarding shareholder returns
① Cancellation of 6.6% of treasury shares currently held by Hyundai Home Shopping;
② KRW 30 billion treasury share buyback and cancellation by Hyundai G.F. Holdings
③ Expansion of the per-share dividend of Hyundai G.F. Holdings to a level equivalent to the existing dividend of Hyundai Home Shopping
(Existing dividend of Hyundai Home Shopping: KRW 2,800 per share ÷ exchange ratio)
Hyundai G.F. Holdings reviewed these proposals through a special committee composed entirely of independent directors and its board of directors, comprehensively considering the dilution impact on existing shareholders arising from the comprehensive share exchange, the effects of expanded shareholder returns, the corporate value enhancement resulting from the resolution of the duplicate listing structure, and the potential for improved capital efficiency at the group level.
As a result, Hyundai G.F. Holdings decided to proceed with the transaction, concluding that—together with improved investment accessibility resulting from an increase in free float—the implementation of a KRW 100 billion treasury share buyback and cancellation, which exceeds the KRW 30 billion buyback and cancellation level initially requested by the special committee of Hyundai Home Shopping, would combine the effects of enhanced shareholder returns and the resolution of the duplicate listing structure of major subsidiaries.
Accordingly, it was determined that both existing shareholders of Hyundai G.F. Holdings and the shareholders of Hyundai Home Shopping who will become shareholders through the comprehensive share exchange would be able to share the mid- to long-term benefits of enhanced shareholder return.