Corporate Raider Icahn's
Hostile Takeover Bid over KT&G?
New York billionaire shareholder activist Carl Icahn has notified Korean financial authorities of its intention to participate in the management of KT&G by acquiring a 6.59 percent stake in Korea's large tobacco company.
Icahn's move has touched off fears of a possible repetition of the so-called Sovereign Case in which foreign fund manager Sovereign had shaken up management of SK Corp., Korea's largest refinery.
Kayman Island-based Icahn Masters Fund LP on February 3 issued an official notice saying that the fund has bought up about 10.7 million KT&G shares, a 6.59 percent interest, in floor trading for the purpose of participation in management. The U.S. financier Icahn is now a registered director of the fund, but virtually the owner of the fund.
Icahn Masters Fund's acquisition of a 6.59 percent stake in KT&G has placed the fund as the third largest KT&G shareholder following Industrial Bank of Korea (15.84 percent stake including treasury stock) and Franklin Mutual Advisers (7.14 percent).
Icahn has been recognized as a well-known corporate raider after a hostile take-over of such giant corporations as TWA and USX. He also put pressure on Time Warner to purchase more treasure shares in the latest of his activities as a corporate raider.
With respect with the Icahn side's demand to recommend an outside director on the KT&G Board of Directors, KT&G said in a statement following an executives'meeting on February 3 that an issue of appointing directors will be dealt with in accordance with the procedures of the Commercial Act and Securities and Transaction Act, so it will be determined by Cumulative Voting. The board is composed of three standing directors and nine outside directors. KT&G has yet to decide how many directors will be replaced in the general shareholders'meeting slated for March. KT&G share prices soared 3.61 percent over a day earlier to close at 51,600 won on February 3. Despite the recent bearish stock march, KT&G share prices surged 14 percent, riding a rally on the fourth straight day. nw