Naver-Dunamu merger hits turbulence as regulatory hurdles mount

The planned merger between Naver Financial and Dunamu is running into serious headwinds.

A string of drawn-out government approval processes has forced the companies to push back the comprehensive share swap — the final step in completing the merger — from September to December.

The deal, widely seen as a landmark transaction that would create South Korea's answer to a big-tech giant, has seen its timeline slip as the companies struggle to clear regulatory hurdles. Concerns are growing that the two firms may squander a critical window of opportunity as the global digital finance landscape undergoes rapid transformation.

On Monday, Naver disclosed that the share swap date for Naver Financial's acquisition of Dunamu had been moved from Sept. 30 to Dec. 31, with the shareholder meeting rescheduled from Aug. 18 to Nov. 19. The share swap is the mechanism by which Naver Financial will make Dunamu a wholly owned subsidiary.

This marks the second time the companies have delayed the share swap schedule. They first pushed back the timeline in March, shifting the swap date from June 30 to Sept. 30 and the shareholder meeting from May 22 to Aug. 18. Compared with the original plan announced when the merger was first disclosed last year, the closing of the deal has already slipped by more than six months.

Industry observers say the Korea Fair Trade Commission's merger review has been a key factor behind the latest delay.

The Fair Trade Commission accepted the companies' merger filing on Nov. 28 last year and launched its review. The standard review period is 30 days from the filing date, extendable by up to 90 days if needed. The industry had expected a decision around May of this year, factoring in time for the companies to submit supplementary materials.

But given the scale of the deal and its potential market impact, analysts say the commission has been scrutinizing a wide range of issues. Last month, the Fair Trade Commission gathered opinions from 18 brokerage firms on the merger, and those firms are understood to have expressed concern about the combined market power of the two companies.

Regulatory clearance from the Fair Trade Commission is not the only hurdle. In their disclosure, Naver and Dunamu said the transaction also requires approval for a change of major shareholder at Naver Financial under the Credit Information Act, along with notification of a concurrent business registration, and acceptance of a major shareholder change notification for Dunamu under the Act on Reporting and Using Specified Financial Transaction Information.

Naver Financial said it extended the timeline "to secure sufficient time to close the transaction in a stable manner, taking into account the Fair Trade Commission review and the notification procedures with financial regulators."

A proposed Digital Asset Basic Act under discussion in the National Assembly also remains a major wildcard. The bill includes provisions that would cap the ownership stake a major shareholder can hold in a virtual asset exchange. As the regulatory environment grows more volatile, analysts say the bill could affect not only the share swap schedule but also the structure of the transaction itself.

While the two companies remain tied up in regulatory procedures, their growth strategies have stalled. That is why voices in the industry are warning that Naver Financial and Dunamu risk missing a critical window to establish leadership in a fast-shifting global financial infrastructure market.

The two companies have laid out an ambitious blueprint: to displace the existing global financial infrastructure built by the likes of PayPal, Visa and Mastercard, and reshape the balance of power in world financial markets.

The vision centers on combining Dunamu's blockchain technology with Naver Financial's mobile payment network and Naver's e-commerce base to build a powerful won-denominated stablecoin ecosystem. Under the plan, Naver Pay would issue a won stablecoin, Dunamu would provide blockchain infrastructure support, and Upbit would handle the listing and distribution of the coin.

Analysts say swift action to secure market leadership is essential, particularly given that the merger would create a company of globally competitive scale by uniting South Korea's top platform company with the world's third-largest virtual asset exchange.

Meanwhile, the share swap ratio and per-share valuation agreed by the two companies last November — 439,252 won ($287) for Dunamu and 172,780 won for Naver Financial — remain unchanged. Once the share swap is complete, Dunamu will become a wholly owned subsidiary of Naver Financial, forming a three-tier structure with Naver as the parent, Naver Financial as the subsidiary, and Dunamu as the sub-subsidiary.