South Korea’s National Pension Service (NPS) gave up its rights to request Mirae Asset Daewoo Securities Co. and Mirae Asset Securities Co. to buy their stakes back on expectations for a rise in their stock prices after they are reborn as the country’s largest securities firm.

Earlier this month, NPS, the county’s largest institutional investor and shareholder of Mirae Asset Daewoo Securities and Mirae Asset Securities, secured its appraisal rights by casting a blank ballot at a general shareholders meeting held to vote on the merger between the two securities companies.

But the pension operator concluded that there are no benefits from executing the appraisal rights because the gap between the price at which NPS can exercise the rights and current share price is minimal, said an NPS official who asked to be unnamed. The pension operator also forecasts the share prices to head north, added the official.

As of the July-September quarter this year, the pension operator owns a 5.93 percent stake in Mirae Asset Daewoo Securities and 9.19 percent in Mirae Asset Securities, and the combined stakes are worth 400.5 billion won ($339.2 million) based on the price at which NPS can demand the share repurchase.

On Thursday, shares of Mirae Asset Daewoo Securities ended at 7,780 won, falling short of appraisal rights exercise price of 7,999 won, while Mirae Asset Securities shares closed at 22,750 won, also below the appraisal rights exercise price of 23,372 won.

Market experts previously advised that NPS would benefit more from not exercising its appraisal rights, considering that it would have to buy stocks of the combined securities firm at a higher price than the appraisal rights exercise price in case it wants to repurchase the stocks of the merged entity that will stand as the leader in the local financial investment market

As NPS decided not to execute the appraisal rights, the total volume of appraisal rights to be exercised on the two securities companies would reach 144.5 billion won at maximum.

Shareholders of the two brokerage houses approved their merger on November 4, and the two companies will complete the merger by the end of this year.

On Friday, Mirae Asset Securities shares ended down 2.6 percent, or 600 won, at 22,150 won from a previous session while Mirae Asset Daewoo Securities closed 1.9 percent, or 150 won, lower at 7,630 won.

By Han Woo-ram and Hong Jang-won

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]