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Photo courtesy of Samyang Foods |
[Alpha Biz= Paul Lee] Samyang Foods has come under scrutiny after it was revealed that the company sold all of its treasury shares to hedge funds just days before a proposed amendment to Korea’s Commercial Act that would mandate the retirement of treasury shares.
The Korea Corporate Governance Forum (KCGF) issued a statement on November 26, questioning whether Samyang’s board “rushed to dispose of treasury shares as assets” ahead of the amendment. On November 24, Rep. Oh Ki-hyoung of the Democratic Party introduced the “third phase” Commercial Act reform bill, which would require companies to retire any treasury shares within one year of acquisition.
Samyang Foods sold its entire treasury stock—worth approximately KRW 99.4 billion, or 1% of all outstanding shares—on November 20, just four days before the bill’s introduction. The shares were sold to Veridian Asset Management, Jump Trading, and Vice Asset Management. The Forum raised concerns about the sale to short-term, profit-driven hedge funds rather than long-term institutional investors such as pension funds.
The Forum also noted that Samyang Foods’ current forward price-to-earnings ratio stands at around 25x 2025 expected earnings, supported by high growth expectations. It warned that the treasury share sale could negatively affect market valuation. The group further criticized the company for redirecting treasury shares originally acquired in February 2022 for “enhancing shareholder value and rewarding management performance” toward funding capital investments nearly four years later.
Samyang Foods denied any link to the proposed Commercial Act amendment, stating, “There is no connection whatsoever,” adding that the proceeds will be used for production facility expansions, including investment in its China plant and domestic manufacturing capacity.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
