Flashlight Capital Partners (FCP) has proposed to acquire the entire 20.6% stake in S1 held by five Samsung Group affiliates for approximately 4.4 trillion won, a price 45% higher than S1's current market capitalization. FCP argues that the Samsung affiliates have no business rationale for holding their shares in S1 and is urging their sale.
On August 27, FCP submitted its acquisition proposal to the boards of Samsung SDI, Samsung Life, Samsung Card, Samsung Securities, and Samsung Fire & Marine Insurance. The proposal targets 7,815,656 shares at a price of 116,000 won per share, totaling about 906.6 billion won.
When converted to the total value of S1's shares, FCP's offer amounts to approximately 4.4 trillion won, which exceeds S1's highest market capitalization of 4.37 trillion won recorded in July 2016.
FCP contends that each Samsung affiliate should consider selling their S1 shares. It points out that Samsung SDI requires funds for significant capital investments, while the four financial affiliates have minimal business ties to S1, which operates in the security sector.
(S1 maintains key customer relationships with Samsung affiliates, suggesting that business ties could continue post-sale, making the potential for synergy a point of contention.)
FCP also highlighted that S1's stock price has fallen more than 30% compared to a decade ago, with a dividend yield of only about 4%. It argues that utilizing the sale proceeds for shareholder returns or enhancing core business competitiveness would be more beneficial for shareholders than retaining the shares.
In June, FCP sent a shareholder proposal to S1's board, requesting improvements in corporate value and business vision. FCP claims that the S1 board has not provided specific goals or alternatives, and it received a response indicating that the board had not conducted a separate analysis of an appropriate stock price.
FCP has requested a response to its acquisition proposal from the boards of the five Samsung affiliates by September 23, citing the legal obligation of directors to act in the best interests of shareholders and demanding transparency regarding the sale decision and its rationale.
Founded in 2020, FCP is a Singapore-based investment firm that emphasizes governance improvement as a key investment strategy. CEO Lee Sang-hyun has a history of acquiring ADT Caps, a competitor of S1, and later selling it to SK Telecom.
* This article has been translated by AI.
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