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CH254 | GSI
🕑 Added 2025-03-27 01:55:30 +0000 UTCChairman Park Tae-hong, momentarily at a loss for words, furrowed his brows and turned to Seok-won.
"Explain it in a way that makes sense."
"It’s exactly as I said. Let’s make the shares they fought so hard to buy completely worthless."
Seok-won shrugged.
"And how do you plan to do that?"
At the chairman’s repeated question, Seok-won smiled and answered calmly.
"Mido Department Store is at the center of the group’s governance structure because it holds a 32.8% stake in Daeheung Textiles, right?"
"That’s correct."
Daeheung Group’s structure revolved around Chairman Park Tae-hong, with its two core subsidiaries—Mido Department Store and Daeheung Textiles—each overseeing several affiliated companies in a pyramid hierarchy.
At first glance, it seemed like an ideal corporate structure.
However, problems arose when Mido Department Store became the largest shareholder of Daeheung Textiles with its 32.8% stake.
This created a fatal vulnerability: anyone who gained control of Mido Department Store would automatically seize control of Daeheung Textiles and, by extension, the entire Daeheung Group.
“It may have been an unavoidable consequence of Mido Department Store supporting Daeheung Textiles during the textile industry downturn, but the weak point it created was far too critical.”
Chairman Park Tae-hong was well aware of this issue.
However, since Mido Department Store was the only subsidiary consistently generating profits and bringing in large sums of cash, he had been hesitant to make any drastic changes.
“The fact that no hostile takeover has ever been attempted in Korea must have lulled the chairman and the group’s executives into a false sense of security.”
Pushing aside his thoughts, Seok-won met the intense gazes of the three men before continuing.
"If we transfer our stake in Daeheung Textiles elsewhere, wouldn’t Mido Department Store’s value as an M&A target plummet?"
The chairman and the other two men widened their eyes in shock.
"…!"
"Transfer the textile shares elsewhere…?"
Up until now, their sole focus had been on acquiring more shares to defend their control.
None of them had even considered such a strategy.
It was as if Seok-won had just struck them all over the head with a hammer.
Realizing what Seok-won was getting at, Chief Secretary Gil Sung-ho let out a quiet gasp.
"If we follow your plan, even in the worst-case scenario, we won’t lose the entire group."
President Park Jin-hyung, still astonished, stared at his younger brother.
"How did you even come up with this?"
"It’s simple. If we engage in a stock battle with Donghae Group, we might win, but the aftermath would be devastating."
President Park Jin-hyung nodded in agreement. That was precisely what had been worrying him.
"Exactly. The public tender offer price has already reached 40,000 won per share. If this fight escalates, who knows how much higher it’ll go?"
"Even if we win at the shareholders' meeting and retain control, it’ll be a Pyrrhic victory."
Right now, the group was scraping together every available cent to finance the stock battle. Because of this, major business plans—like the expansion of the second factory in China—had been put on hold or indefinitely postponed.
That was the best-case scenario.
If they ended up borrowing money through bank loans or high-interest private financing to fund stock purchases, the burden would eventually come back to haunt them.
“Given that lenders are fully aware of the ongoing stock battle, it's obvious that any emergency funds we secure will come with exorbitant interest rates.”
On top of that, considering the impending IMF crisis, waging a capital war against Donghae Group was the worst possible strategy.
Although Chairman Park Tae-hong and the others weren’t aware of the looming IMF crisis, they did understand that the stock battle was nothing short of self-destruction.
Still, they had no choice but to pour in every available resource. If they lost control of the group, there wouldn’t be a future to worry about.
"Donghae Group is also feeling the financial strain from this premature M&A attempt."
At this, the three men nodded in unison.
"They’ve thrown an enormous amount of money into acquiring shares. But what if, after all that, Mido Department Store turns out to be an empty shell?"
A smirk curled up on one side of Seok-won’s lips.
It was undoubtedly a strategy that would deal a serious blow to Donghae Group.
However, Chairman Park’s face grew even more rigid.
"Are you telling me to give up Mido Department Store? Sure, if we transfer our stake in Daeheung Textiles elsewhere, we can prevent the loss of the entire group. But we’ll still lose the department store and all the subsidiaries under it."
His voice was laced with displeasure.
"If the department store goes, along with Korea Economic Daily, our securities firm, and other subsidiaries, half the group will be gone."
Chief Secretary Gil Sung-ho also voiced his concern.
Technically, it was only "half" the group, but in reality, it was the most profitable half.
If they lost Mido Department Store, Daeheung Group’s status would shrink drastically.
Daeheung Securities, which had been flourishing under Seok-won’s leadership and posting consecutive profits, was also a subsidiary of Mido Department Store.
There was no need to explain further.
"It’s certainly an unconventional and clever approach, but the losses seem greater than the gains if we give up the department store."
As everyone expressed their doubts, Seok-won remained unfazed.
"When did I ever say I was giving up Mido Department Store?"
"But you just said you’d transfer the textile shares elsewhere and make Donghae Group overpay for Mido Department Store stock."
"That’s true. But I never said I’d actually hand over the department store to them."
"What?"
Chairman Park furrowed his brows.
President Park Jin-hyung shook his head, rubbing his temples, while Gil Sung-ho looked just as perplexed.
Under their scrutinizing gazes, Seok-won continued, completely unbothered.
"We’ll drive up the tender offer price, forcing Donghae Group to overpay for shares. But before the special shareholders' meeting, we’ll make them cough up all those shares at rock-bottom prices."
Everyone’s expressions screamed disbelief.
Chairman Park was the first to challenge him.
"That’s impossible. How do you plan to pull that off?"
"Because I—no, we—are about to loot an empty house."
Seok-won flashed a grin.
"Loot an empty house?"
Chairman Park Tae-hong frowned, tilting his head in confusion before finally losing his temper.
"You brat! Speak so I can understand!"
"It’s exactly as I said. They’re trying to steal Mido Department Store’s management rights. But instead of just defending, we’ll turn their own strategy against them and attack Donghae Yuryang."
Chairman Park’s eyes widened.
"Donghae Yuryang? That’s the parent company of Donghae Group!"
"That’s right. It controls all of their subsidiaries. If we strike there, we’ll be targeting their Achilles' heel—one that could shake their entire group."
As the three men stared at him in shock, Seok-won continued in a calm, measured tone.
"Chairman Woo Yong-gap and his family own 27.6% of Donghae Yuryang. It’s higher than the stake we hold in Mido Department Store, but it’s still not enough to ensure complete control."
"……!"
For most chaebol (conglomerate) families, even a 25% stake was considered a solid foundation for control.
However, if they became the target of a hostile takeover—just like Mido Department Store—the situation would change completely.
"Once they’ve poured every last penny into acquiring Mido Department Store shares and find themselves stuck in a financial quagmire, we’ll launch an attack on Donghae Yuryang. At that point, they’ll have no way out."
Chairman Park’s eyes gleamed with realization.
"That’s right! If their headquarters is under siege, they won’t have the luxury of attacking elsewhere."
Excited by the clever plan, Chairman Park slapped his knee in delight.
However, Secretary-General Gil Sung-ho remained cautious and pointed out a critical concern.
"But if they seize control of Mido Department Store before we’ve secured enough Donghae Yuryang shares, we’ll be the ones in trouble."
President Park Jin-hyung nodded, sharing the concern.
"It’s a brilliant idea, but the timing is tricky. And more importantly, they’re not idiots—they won’t just sit back and let this happen."
Even so, the strategy was undeniably a way to catch their rivals off guard.
Park Jin-hyung sighed in frustration.
"If only we already had a significant amount of Donghae Yuryang shares…"
"Wait, you don’t mean—?"
Seok-won’s lips curled into a confident smile.
"We’ve already secured over 15% of Donghae Yuryang’s shares, and we’re still buying more."
"!"
All three men looked utterly stunned.
Chairman Park leaned forward, eyes wide, demanding an explanation.
"How the hell did you manage that?"
"I just used the same tactic that Donghae Group did."
Realizing what he meant, Secretary-General Gil Sung-ho gasped sharply.
"Then… you disguised yourself as a foreign investor to acquire shares?"
"That’s right. You remember how I warned long ago that Donghae Yuryang’s weak governance structure made it vulnerable to a hostile takeover, don’t you?"
"I do."
Chairman Park Tae-hong nodded slightly, his face full of regret.
"Just in case, I set up a few paper companies in Hong Kong. The moment I found out that Donghae Group was targeting Mido Department Store, I immediately started acquiring Donghae Yuryang shares."
"Huh..."
Chairman Park let out a low exclamation. President Park Jin-hyung and Secretary-General Gil Sung-ho, too, couldn’t hide their admiration for Seok-won’s quick thinking and decisive action.
While they had been scrambling to respond to Donghae Group’s M&A attempt, Seok-won had already foreseen the situation and made the first move.
As their impressed gazes focused on him, Seok-won calmly continued his explanation.
"If we acquire just 5% more on top of what we already have and call for an emergency shareholders’ meeting, Donghae Group will be under enormous pressure."
"That’s for sure."
"At that point, they’ll have to make a choice—either continue the risky takeover of Mido Department Store or abandon the M&A and come to the negotiation table with us."
"Hah!"
Chairman Park, whose face had been tense moments ago, burst into laughter.
"Here I was, thinking we’d be stuck on the defensive. But instead, we’re about to smack them from behind. Just imagining it is satisfying!"
"Exactly. Donghae Group would never have expected to be caught in their own trap like this."
President Park Jin-hyung, now more relaxed, nodded in agreement.
Just then, Secretary-General Gil Sung-ho adjusted his gold-rimmed glasses and spoke up.
"But there’s still one issue left."
"What is it?"
"To execute this plan, Mido Department Store’s textile shares need to be sold to someone else. But none of our affiliates are in a position to take them. If we use any questionable methods, Donghae Group will seize the opportunity to challenge us."
"Ah, don’t worry about that—I’ll take them myself."
Seok-won replied nonchalantly, causing Chairman Park to blink in surprise.
"You’ll take them?"
"Yes. More precisely, I plan to acquire them through Daeheung Venture Capital."
Hearing this, Secretary-General Gil Sung-ho tilted his head in doubt.
"Even at a low price, it would still cost at least several hundred billion won. As far as I know, Daeheung Venture Capital doesn’t have that kind of spare capital."
"It does now. I made an additional investment and increased its capital by $400 million."
At this, Chairman Park’s expression shifted, as if something had clicked in his mind.
"With your own money?"
"Yes. Now that it’s officially my private company, I figured it was time to grow it properly."
Since all three of them were well aware of Seok-won’s substantial wealth, they nodded in understanding.
For some reason, Seok-won shot a brief sideways glance at his older brother, President Park Jin-hyung, before revealing the final piece of his plan.
"Once we secure the management rights, and after everything settles down, we’ll exchange these shares with the group’s securities holdings."
"You’re saying you’ll swap them for securities shares?"
"You were planning to give me the securities division anyway."
Seok-won said with a sly smile.
"Well, that’s true, but..."
Chairman Park Tae-hong trailed off, then suddenly turned to look at his eldest son as a thought crossed his mind.
"Since we were going to separate the affiliates eventually, this might be a good opportunity to reorganize the shares."
Everyone immediately understood that Seok-won was being considerate of his older brother, Park Jin-hyung. Now that Daeheung Venture Capital—Seok-won’s private company—was set to become the major shareholder of the textile company, he was ensuring that no unnecessary misunderstandings would arise.
"Yes, that would be for the best."
Chairman Park nodded in agreement, his gaze softening as he looked at both his sons.
Comments
Rivo
Gotta agree with his dad, just state is simply brat!
