How is the merger ratio between a SPAC and an unlisted company determined?

The merger ratio is determined by each company's merger value, and the merger value of an unlisted corporation is in principle calculated using the formula in the Enforcement Decree of the FSCMA, that is, by taking the arithmetic mean of a value weighting asset value and earnings value at 1 to 1.5 and the relative value.

However, the Korea Exchange explains that, to facilitate SPAC mergers, it leaves the valuation of the unlisted corporation to the parties' discretion if certain requirements are met. The higher the unlisted company's merger value is set, the lower the stake existing SPAC shareholders hold after the merger, so it is important to check the valuation basis in the securities registration statement for the merger.