Naver–Dunamu Merger Faces Scrutiny Over Digital Asset Volatility, Locked Capital
Seoul, South Korea – Teh planned merger between Naver Corporation and Dunamu, operator of South korea’s largest cryptocurrency exchange Upbit, is drawing increased attention to the challenges of valuing a digital asset-heavy company amid market fluctuations. approximately 3 trillion won of Dunamu’s 15 trillion won in total assets are held in cryptocurrency, raising concerns about potential risks to the deal’s valuation and final merger ratio.
The meaningful portion of Dunamu’s assets tied up in volatile digital currencies, coupled with 7.4883 trillion won held as customer deposits unavailable for corporate use, presents a unique valuation hurdle. Unlike traditional mergers and acquisitions, the inherent price swings of cryptocurrencies introduce uncertainty into future cash flow projections – a key component of corporate valuation. This situation could necessitate adjustments to the merger agreement to account for potential volatility, impacting the final terms for both companies and their shareholders.
experts suggest several approaches to mitigate these risks. One accounting expert noted, “The risk of digital asset price fluctuations may already be reflected in the contract between both companies,” while suggesting a potential recalculation of value before a general shareholders’ meeting. Professor Ahn Seong-hee of the Catholic University of Korea explained that increased volatility leads to greater uncertainty in future cash flow, possibly resulting in a ”large discount rate” applied to dunamu’s valuation.
Despite these concerns, some market analysts remain optimistic. One expert emphasized the potential for synergy between Naver and Dunamu, stating, “we will be able to increase our corporate value by one level in that we have secured a new growth engine.” However, the ultimate success of the merger hinges on how both parties navigate the complexities of valuing digital assets and agree on a fair merger ratio that addresses the inherent risks.
Reporter Kim Nam-seok of Digital Times contributed to this report.
