Five Samsung affiliates turn down 906.6 billion won for S-1 shares worth about 659 billion at market price

Divide the bid by the valuation and you get the size of the block. 906.6 billion won over about 4.4 trillion won is roughly 20.6% of S-1 ^[22]. At a market capitalisation of about 3.2 trillion won ^[3], those shares are worth around 659 billion won ^[23]. Flashlight is therefore offering about 247 billion won more than the market would pay ^[24]. By saying no ^[5], the five boards have chosen not to turn roughly 907 billion won of S-1 stock into cash ^[1]. The Korea Herald account does not break the block down by affiliate, and it does not say how Flashlight would pay for it. Flashlight's argument that the market has S-1 wrong rests on a multiple. It says S-1 trades at 3.6 times EBITDA on an enterprise-value basis, against roughly 12 times for rival SK Shieldus in a deal several years ago ^[10]. The Korea Herald notes that the comparison spans different companies and periods ^[11]. The stock has fallen about 30% over a decade ^[9], even though S-1 has about half of Korea's security market ^[8]. Flashlight has also criticised Samsung for putting its own executives, with little background in the security business, into S-1's top management and onto its board ^[20]. The case for holding is commercial. Samsung Electronics, Samsung Life Insurance and Samsung Display supplied about 35% of S-1's 2025 revenue, roughly 1.02 trillion won, according to company disclosures ^[12]. S-1 also guards Samsung Electronics' chip plants, which house technologies the government designates as national core technologies ^[13]. Put the customer list next to the seller list and only Samsung Life is on both ^[26]. Samsung Electronics, whose fabs S-1 protects, is not among the five sellers ^[1]. None of the other four sellers is named among the customers behind that 35% ^[26]. The Korea Herald says replacing a security provider at such sites would not be straightforward, and it attributes the durability of the contracts to familiarity, reliability and continuity ^[14]. In my view that stickiness comes from the service, and it would survive a change in who owns a fifth of the shares ^[14]. Last year's revision of the Commercial Act extended directors' fiduciary duties to shareholders as well as the company ^[16]. A premium does not oblige a board to sell. It still has to weigh execution risk, future returns and strategic benefit ^[17]. The affiliates picked execution risk, citing doubt that the deal would complete ^[5], and Flashlight's open-auction proposal goes straight at that objection ^[6]. From here the boards can hold and publish a case for each stake. They can agree to an auction and let other bidders set the price. Or the five can split, with Samsung Life, the one seller that is also a top customer, keeping its shares while the other four sell ^[26]. Even if all five sold, the Samsung affiliates and Secom would still hold roughly 24% ^[25], down from about 45% ^[15]. I think the completion objection is the weakest one the affiliates could have picked, or rather the easiest to remove, because an auction answers it directly ^[6]. That leaves a strategic case that four of the five boards would be making on behalf of customer relationships held by other Samsung companies ^[26]. On the other side, Flashlight's undervaluation case rests on a multiple from another company in another year ^[11]. And because it already holds just over 1% ^[4], Flashlight gains from any re-rating no matter who buys the block. An auction that drew no credible bid near 4.4 trillion won would prove the boards right. The Korea Herald says it is unresolved whether an auction would attract credible buyers or an acceptable price ^[19]. S-1 is outside Samsung's central ownership links, so it lets an activist question affiliate holdings without going after the group's control structure ^[7].