KX Innovation to Merge with 100% Subsidiary 'MNCNetMedia'... "Enhancing Management Efficiency"

KOSDAQ-listed media company KX Innovation (hereinafter KX Innovation) announced on the 17th that it has decided to merge with its subsidiary MNCNetMedia to integrate its broadcasting business and improve management efficiency.

This merger will be conducted as a capital-free merger without issuing new shares, as KX Innovation owns 100% of the shares in the merged entity, MNCNetMedia. The merger ratio is 1 to 0, and since it is being pursued as a small-scale merger, the appraisal rights of shareholders are not granted. After the merger, KX Innovation will remain as the surviving entity, and MNCNetMedia will be dissolved.

The surviving entity, KX Innovation, is a comprehensive media company that operates the drama specialty channel 'D1', movie channel 'Mplex', general entertainment channel 'X1', and documentary specialty channel 'Real TV' based on the largest broadcasting transmission business in Korea. The disappearing entity, MNCNetMedia, is also a subsidiary that has been engaged in the Program Provider (PP) business and media-related infrastructure business within the KX Group.

Although MNCNetMedia is an unlisted company, it possesses a substantial asset scale, recording total assets of 257 billion won, total equity of 234 billion won, and a net income of 3.37 billion won as of the end of last year (2025).

Risks related to contingent liabilities and lawsuits, which are points of caution for investors, are expected to be limited. According to the disclosure, the merged entity, MNCNetMedia, is currently facing a damages lawsuit (ongoing in the first instance) worth 3.03 billion won from TGV Leisure Co., Ltd. in connection with real estate it transferred in the past. In response, MNCNetMedia has also filed a countersuit of 1.2 billion won, and the company judges that there will be no material impact on its financial status. In addition, it has preemptively reflected approximately 8.84 billion won as a provision for liabilities to fulfill its obligation to participate in the Club 72 Golf Course (formerly Sky 72) consortium, and is receiving a total of 18.5 billion won in payment guarantees from Seoul Guarantee Insurance.

KX Innovation stated, "As both companies are operators engaged in the Program Provider business, we will integrate human and physical resources through this merger," adding, "We expect to generate positive synergies across our finances and operations by reducing administrative and business costs and simplifying our corporate governance."

Meanwhile, the general shareholders' meeting for merger approval will be replaced by the board of directors' approval due to the nature of a small-scale merger. The period for receiving notices of dissenting opinions to the merger is from July 3 to July 17, and the merger is scheduled to be finally completed on August 21, 2026, following the creditor objection submission period, which is expected to materialize full-scale integration synergies starting in the second half of the year. However, if shareholders holding 20% or more of the total issued shares oppose in writing, the progression of the small-scale merger may be restricted and the schedule could be changed.