The merger between Naver Financial and Dunamu, the operator of South Korea's largest cryptocurrency exchange Upbit, has been postponed by approximately three months. The companies had originally planned to complete the merger in the first half of this year, but the delay in the antitrust review combined with proposed legislation to cap major shareholders' stakes in cryptocurrency exchanges has complicated the timeline.
Naver (035420.KS) disclosed on the 30th that the shareholder meeting for the comprehensive share swap between its subsidiary Naver Financial and Dunamu has been pushed back from May 22 to August 18. The deal closing date has also been moved from June 30 to September 30.
Naver Financial and Dunamu announced in November last year that they would pursue a merger through a comprehensive share swap. Under the deal structure, Dunamu would become a wholly owned subsidiary of Naver Financial, effectively making it a second-tier subsidiary of Naver.
The postponement stems from regulatory approval procedures and legal issues. The Fair Trade Commission (FTC) accepted the merger filing from both companies in November last year and launched its review. Given that the deal combines the leading players in the mobile payments and cryptocurrency markets, the FTC is known to be closely examining market dominance and potential monopoly concerns. The original review deadline was the 28th of this month, but the period was extended after the FTC recently requested additional materials.
Industry observers believe that financial regulators' proposed caps on major shareholder stakes have also played a role. The government and ruling party are currently pushing to limit stakes held by major shareholders and their related parties in cryptocurrency exchanges to 20% or below through the Digital Asset Basic Act. A provision allowing up to 34% for entities approved by the Financial Services Commission (FSC) has been tentatively agreed upon, but major shareholders at all leading exchanges including Dunamu currently exceed that threshold. In its disclosure, Naver stated, "As discussions on the legislation of the 'Digital Asset Basic Act' appear to be underway, the content of such legislation, once enacted and implemented, may affect the progress or outcome of this comprehensive share swap."