The headquarters of Tongyang Life Insurance in Jongno-gu, Seoul. [Tongyang Life Insurance]
The headquarters of Tongyang Life Insurance in Jongno-gu, Seoul. [Tongyang Life Insurance]

Tongyang Life Insurance shareholders approved a comprehensive share-exchange agreement with Woori Financial Group at an extraordinary general meeting Friday, clearing the way for the insurer to become a wholly owned subsidiary of Woori Financial next month.

Tongyang Life said in a regulatory filing that the share-exchange resolution passed as a special resolution. The approval rate was 79.9% based on total shares with voting rights, and 93.6% based on shares actually voted at the meeting. Opposition and abstentions combined accounted for 6.4 percent. The Woori Financial board also gave its final approval to the deal the same day.

Under the comprehensive share exchange, Tongyang Life shares will be converted into Woori Financial shares. Woori Financial already holds Tongyang Life as a subsidiary, but the deal will absorb the remaining minority stake — about 19.6 percent — to bring its ownership to 100 percent. The exchange ratio is 0.2521056 Woori Financial shares per one Tongyang Life share. The exchange price is set at 34,589 won ($25) per Woori Financial share and 8,720 won per Tongyang Life share.

The transaction hit a snag over disagreements on the exchange price. Minority shareholders pushed back, arguing the company was undervalued after the per-share price offered to them — 8,720 won — came in about 17 percent below the 10,562 won per share that Woori Financial paid when it acquired a stake from former major shareholder Dazhe Insurance of China. The Financial Supervisory Service in May ordered Tongyang Life to revise its securities registration statement, asking it to strengthen the basis for its valuation. Tongyang Life held two shareholder briefings to explain its methodology and brought in an additional accounting firm to re-verify the exchange ratio.

Earlier this month, Woori Financial and Tongyang Life raised the share appraisal rights price for dissenting shareholders by 10 percent, from 8,505 won to 9,356 won. The exchange ratio and exchange price were left unchanged; only the cash-out terms for shareholders opposing the deal were improved. Woori Financial's securities registration statement took effect July 16, about two months after the correction order was issued.

The remaining step is the share appraisal rights period. Tongyang Life will complete the share transfer to Woori Financial on Aug. 11, following a buyback request window that closes Aug. 3. New Woori Financial shares are scheduled to list on Aug. 31, while Tongyang Life will proceed with delisting from the Kospi.


psj@heraldcorp.com