KT&G Corp, South Korea's dominant tobacco company, said yesterday its annual shareholders' meeting will go ahead this week, setting up a showdown with insurgent investors led by US billionaire Carl Icahn.
KT&G's shareholders' meeting will proceed as scheduled on Friday, company spokesman Simon Lee said following a court ruling that rejected a request by Icahn's camp to halt the election for outside directors at the meeting.
Icahn and his associates claim KT&G is shortchanging investors and want steps taken to bolster its share price, including listing a subsidiary and selling idle real estate assets.
PHOTO: AP
The tobacco company has rejected those demands and an informal offer to purchase the company, valuing it at about US$10 billion.
Acting as the KT&G Full Value Committee, the investors led by Icahn and Warren Lichtenstein have become the firm's second-largest shareholders, amassing 6.72 percent of its stock.
Though they nominated three candidates for the two openings for outside directors on the KT&G board, the Icahn-led investors alleged the company was unfairly limiting the number of positions and sought an injunction to halt the vote at the board meeting.
The Daejeon District Court yesterday rejected that claim, saying in a ruling it could find nothing illegal on the part of KT&G, which is headquartered in Daejeon, 165km south of Seoul.
The company had been considering postponing the meeting if the court ruled in favor of the Icahn-led investors.
KT&G, in a statement e-mailed to reporters, expressed satisfaction at the ruling.
"The company considers it very encouraging that the court confirmed the decision of the company's board was legitimate," KT&G said regarding its method for electing board members.
The battle has garnered headlines in South Korea, where investor activism practiced by Icahn is rare. His prominence in the US, where he recently fought a high-profile battle with media giant Time Warner Inc, has also fueled interest.
Last week, Franklin Mutual Advisers LLC -- KT&G's largest shareholder with a 9.37 percent stake -- said it would back the dissidents.
KT&G said yesterday it was cooperating with a pair of South Korean banks, one of them its third-largest shareholder, that have expressed interest in supporting it at the board meeting and fending off the takeover attempt.
Icahn and Lichtenstein have hinted they are ready to consider increasing their informal bid and reserve the option of launching a formal tender offer.
If the pair's attempt to acquire KT&G succeeds, it would mark the first unsolicited buyout of a major South Korean company by overseas investors.
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