[Market Power] Samchuly Bicycle's share buyback may boost major shareholder's voting power

Oct 23, 2026, 09:41 am

Samchuly Bicycle has moved to repurchase an additional 3.5 billion won worth of treasury shares after canceling approximately 4.4 billion won worth of its own shares. While the company cites share price stabilization and enhancing shareholder value as its objectives, the buyback is also expected to increase the voting power of its largest shareholder.

According to the Financial Supervisory Service's electronic disclosure system on Oct. 22, Samchuly Bicycle decided on Oct. 19 to enter into a 3.5 billion won trust agreement with Korea Investment & Securities to repurchase its own shares. The agreement will remain in effect until April 20, 2027. The company plans to acquire 862,068 common shares, although the actual number purchased may vary depending on share price fluctuations and other factors. Whether the repurchased shares will be canceled has yet to be determined.

Samchuly Bicycle previously canceled 821,703 treasury shares on Oct. 15, representing 6.63% of its 12.4 million issued shares. The book value of the canceled shares was approximately 4.3777 billion won. The total consisted of 729,703 shares acquired through a tender offer in September and 92,000 shares the company already held.

The company had initially planned in August to acquire 2.408 million shares through a tender offer and cancel all of them. However, it purchased only 729,703 shares, or 30.3% of its target. It subsequently canceled those shares along with some of its existing treasury shares and is now pursuing an additional buyback.

The need to recover its share price is also behind these moves. Trading in Samchuly Bicycle shares was suspended in January over allegations of breach of trust involving Chairman Kim Seok-hwan before resuming on April 20. After trading resumed, the share price climbed as high as 7,450 won but fell to 3,040 won in July, a decline of 59.2% from its peak. Although the stock recovered somewhat in August and September during the company's treasury share tender offer, it closed at 4,750 won on Oct. 22.

A Samchuly Bicycle official explained the reason for the additional buyback, saying, "We believe we have not yet adequately met the market's expectations." The company also said it may consider further share repurchases and cancellations in the future.

However, treasury share repurchases and cancellations can affect not only shareholder returns but also the ownership and control structure of the company's largest shareholder.

By canceling 821,703 treasury shares on Oct. 15, Samchuly Bicycle increased the combined ownership stake of its largest shareholder, GL&Co, and its related party, Very Good Tour, from 41.45% to 44.39%. However, after accounting for voting restrictions on treasury shares and cross-held shares, GL&Co's actual voting power stands at approximately 40.63%, unchanged by the cancellation itself.

If the company acquires all 862,068 shares planned under the 3.5 billion won trust agreement, GL&Co's voting power could increase to approximately 44.32%. If all those shares are subsequently canceled, the combined ownership stake of the largest shareholder and its related party would rise to approximately 47.96%. However, the actual figures may vary depending on the scale of the repurchases and cancellations and changes in existing shareholders' holdings.

GL&Co is a company in which Chairman Kim holds a 72.6% stake and owns 4.2 million Samchuly Bicycle shares. Very Good Tour is an affiliate in which Samchuly Bicycle is the largest shareholder and holds 940,000 Samchuly Bicycle shares. The number of shares held by the two companies remained unchanged before and after the latest cancellation.

It is important to distinguish between ownership percentages based on issued shares and actual voting power. Treasury shares lose their voting rights as soon as a company repurchases them, meaning that canceling shares already acquired does not further increase the largest shareholder's voting power. The 940,000 Samchuly Bicycle shares held by Very Good Tour are also subject to voting restrictions under South Korea's Commercial Act.

Ultimately, if the additional buyback proceeds as planned, GL&Co's voting power will increase even without any increase in the number of shares it holds. This means that the company's share repurchase program, intended to enhance shareholder value, will also have the effect of strengthening the largest shareholder's relative control.

The company maintains that its focus is on enhancing shareholder value rather than expanding control. "When the number of shares decreases and the value of each share rises, shareholder value naturally increases as well," a Samchuly Bicycle official said. "We are not considering anything else."

Treasury share repurchases and cancellations can help increase value per share, but whether they will lead to an actual recovery in the stock price is a separate issue. In particular, because the largest shareholder's voting power increases during the repurchase process, the measures could simultaneously affect shareholder returns and the company's ownership structure. The key questions going forward will be how much of the additional share repurchase plan is actually carried out, whether the repurchased shares are eventually canceled, and to what extent these measures contribute to stabilizing the share price and restoring investor confidence.

"Canceling or repurchasing treasury shares is a common way to enhance shareholder value, but relying on a single approach is not desirable," said Kim Ik-sung, a professor in the Department of Business Administration at Dongduk Women's University. "Companies should also consider various shareholder return measures, such as increasing dividend payments or raising the dividend payout ratio, while taking into account their business performance and financial conditions."

Lee Cheol-hyun

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