South Korean tobacco giant KTG won support from two domestic banks yesterday after rejecting a new takeover offer from US corporate raider Carl Icahn, officials said.
KTG said Woori Financial Group and Industrial Bank of Korea had offered to buy a 9.8 percent stake in the company.
"Their proposal, which includes the purchase of treasury shares, will help us fend off a possible takeover attempt from Icahn," a KTG spokesman said.
The two lenders plan to form a committee involving other domestic supporters of KTG's management, which is locked in a proxy war with Icahn ahead of a shareholders' meeting on Friday.
Icahn and his associates last week offered more than 70,000 won (US$72) per share, higher than its earlier bid of 60,000 won to buy KTG shares. KTG has ignored the new offer.
Six outgoing directors of the 12-member board will be replaced at the meeting. With a combined stake of 6.7 percent, Icahn and his allies are fielding three candidates including Warren Lichtenstein, president of US investment fund Steel Partners.
The proxy war heated up this week after Lichtenstein claimed that Korea Securities Depository (KSD) blocked some foreign shareholders from voting electronically ahead of the shareholders' meeting.
The securities clearing house has stopped receiving votes from foreign shareholders on March 9, one day shy of the expected date, Lichtenstein said.
"The deadline by which foreign shareholders could electronically vote for the board was moved forward by one day without any official notice being given," he said.
KTG described the KSD as "a fully independent agency" and urged Icahn and his associates to comply with its decision.
Lichtenstein, however, warned that foreign investors may take legal action against KSD's decision.
"This sort of unpredictable and inconsistent behavior on the part of KSD has caused a number of foreign shareholders to lose an opportunity to vote [with] their shares," he said.
The hostile foreign bid for control of KTG has touched a raw nerve here and is stirring up a new wave of economic nationalism against overseas investors.
The bid for KTG, one of six companies awarded the highest rank for good corporate governance by the stock exchange, comes at time of rising concern here about the role of foreign investment.
Opposition has been sparked by the massive profits foreign investors have realized in tax-free operations and by their apparent growing influence, as reflected in their combined holding of 40 percent of South Korea's total stock market capitalization.
The government is trying to steer a middle course, holding out the welcome mat for foreign capital while taking steps to soothe fears that outsiders are plundering the nation's wealth.
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