Korea Media Giant's $3.2 Billion Merger Approved by Shareholders

(Bloomberg) -- South Korea’s largest media conglomerate won the approval of shareholders to merge two units amid intensifying scrutiny of corporate governance at big family-run business groups in the country.

CJ Group’s plan for its home-shopping unit CJ O Shopping Co. to acquire its K-pop business CJ E&M Corp. garnered support from the companies shareholders, the companies said in filings Tuesday following extraordinary general meetings. The transaction was valued at $3.2 billion as of the May 28 close in Seoul.

The nod from shareholders represents a victory for the company’s founding family and follows the rejection of a controversial plan to restructure Hyundai Motor Group that was seen as emblematic of the rising scrutiny of transactions by the family-run conglomerates known locally as chaebol. CJ Group, which began as a sugar company and expanded to biotechnology, logistics and entertainment, has said it intends to raise revenue to 100 trillion won ($93 billion) by 2020 from about 30 trillion won in 2016.

CJ had announced the plan in January and drew opposition from one of the largest proxy advisories, Institutional Shareholder Services Inc. ISS rival Glass Lewis & Co. supported the merger, saying the financial terms were fair and that shareholders would benefit from a simplified corporate structure.

Under the proposal approved May 29, CJ O will pay 0.41 of its stock for every share in CJ E&M, valuing the offer at 88,860 won a share, or 0.2 percent more than the market value as of Monday. The new merged company will be named as CJ ENM, with a completion of the transaction scheduled for July 1.

About 43 percent of CJ O and CJ E&M are held by members of the founding Lee family and parties related to the company itself. The deal needed a two-thirds majority to succeed with at least one-third of shares voting.

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