Bloomberg – KT&G Corp. rejected a bid from U.S. investors Carl Icahn and Warren Lichtenstein that valued the tobacco maker at $10 billion, raising the prospect of the nation’s biggest hostile takeover battle.
The board decided the offer wasn’t “in the best interests of the company,” Daejeon-based KT&G said in an e-mailed statement. Last week’s proposal by the New York-based fund managers, who own a 6.2 percent stake, was made to the board and hasn’t yet been offered directly to shareholders.
The U.S. investors said they’ve committed $2 billion of their own money to the bid and can borrow the rest, after failing to persuade South Korea’s biggest tobacco company to sell property, spin off its ginseng unit and raise dividends. KT&G has sought support from shareholders to block the plans while the government has said it won’t stand in the way of foreign ownership of the company.
“They will continue to pressure KT&G to accept their proposals in every way, and proceeding with the takeover offer is one of their options,” said Hwang Ho Sung, an analyst at Woori Investment & Securities Co.
The last unwelcome bid by a foreign investor in South Korea, Asia’s third-largest economy, failed in 1997.
Jason Booth, spokesman for Lichtenstein’s Steel Partners II LP, and Lee Kyung Hoon, a lawyer representing Cayman Islands- based Icahn Partners Master Fund, declined to comment on the rejection by KT&G’s board.
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