SEOUL, Feb. 26 (Korea Bizwire) - Shareholders of CJ Hellovision Co., South Korea’s top operator of cable channels and Internet TV content, approved a proposed merger with the country’s No. 1 mobile carrier on Friday amid controversy about its legality.
Around 97 percent of the shareholders attended the shareholder meeting voted for the merger proposal, which translates into 75.2 percent of shareholders approved the deal.
SK Telecom Co. offered to buy CJ Hellovision from CJ O Shopping Co. in November of last year with a plan to merge it with its wholly owned subsidiary SK Broadband Co.
The mobile carrier intends to buy additional shares from CJ O Shopping, which owns around 54 percent stake in CJ Hellovision. SK Telecom offered to purchase a 30 percent in CJ Hellovision, and buy the remaining later through options.
The move was widely seen as a move by SK Telecom to become a media giant that encompasses both mobile networks and entertainment content.
The proposed takeover by SK Telecom, however, has drawn strong criticism from its rivals KT Corp. and LG Uplus Corp., which claim that the corporate deal will distort market discipline given SK Telecom’s dominant position in the mobile network industry.
The two mobile carriers also insist that CJ Hellovision’s shareholder meeting is illegal, as South Korean regulators have not yet approved the merger.
In a report released earlier this week, U.S.-based Institutional Shareholder Services Inc. (ISS) said the changes in corporate articles of the merged entity will pose “significant dilution risk to shareholders” of CJ Hellovision.
The ISS is a global advisory firm to global hedge funds and institutional investors, advising them about shareholder votes.
The ISS claims that the proposed buyback price of CJ Hellovision’s shares at 10,696 won (US$8.62) holds no premium over the closing price of 11,600 won posted on Feb. 12, when the ISS’s report was written.
CJ Hellovision closed at 11,650 won on the Seoul bourse on Thursday.’