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S. Korea plans measures against hostile foreign takeovers
SEOUL, March 19 (Yonhap) -- The Justice Ministry said Wednesday it was devising measures to stave off hostile takeovers of domestic firms by foreign investors amid growing takeover bids by foreign firms in recent years.
In a policy briefing to President Lee Myung-bak, Justice Minister Kim Kyung-han presented a package of pro-business plans for this year that have been pending since the previous administration.
The package, distributed to the media after the briefing, features the "poison pill" measure to fend off unwanted takeover attempts. The poison-pill provision, already adopted in the United States and France, will grant shareholders the right to acquire a large number of shares at a low price if outside bidders try to take control without the consent of the board of directors.
The defensive measure has been requested by local conglomerates amid fear of hostile takeovers by foreign funds in recent years. Leading firms such as SK Corp., South Korea's largest oil refiner, and KT&G Corp., the country's largest tobacco company, faced takeover threats from Sovereign Asset Management and US investors Carl Icahn and his partner Warren Lichtenstein, respectively.
In a further boost for local corporate owners, the ministry will seek legal revisions to introduce the dual class stock system, which will grant main shareholders more voting rights than the shares they own to tighten their grip on management. Critics have claimed the system infringes upon the interests of minor shareholders.
Such measures were pursued in the later years of the Roh Moo-hyun administration, which submitted the Commercial Law revision to the National Assembly last year. But the bill that centers on adopting the poison pill and dual class stock systems has yet to be voted on in the legislature.
"All these measures are part of the ministry's goals for this year, and the Justice Ministry has been discussing that with other government offices," ministry spokesman Han Jeong-jin said.
Nurturing a pro-business environment has been one of the main objectives for Lee, a former Seoul mayor and former CEO of Hyundai Construction and Engineering, who pledged to achieve 7 percent annual economic growth during his election campaign.
hkim@yna.co.kr
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