Carl Icahn’s shareholder activist team is preparing to step up the pressure in its battle with KT&G.
It is considering another proxy battle or even taking legal action over its claimed difficulties in obtaining financial documents from the South Korean tobacco and ginseng group.
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Frustrated at the way KT&G’s management is allegedly creating obstacles to Warren Lichtenstein – the Wall Street financier’s ally – participating fully on its board of directors, the duo is understood to be discussing options to force the board to change, such as continuing to build their stake in the tobacco maker or launching a full tender offer.
“Warren Lichtenstein wants access to financial records going back a couple of years and to be able to bring his own interpreter to the board meetings but KT&G is just stalling or saying no,” said one person close to the pair, who now own a 7.6 per cent stake.
Mr Icahn and Mr Lichtenstein made a $10bn “bear hug” offer for KT&G this year after the management rebuffed their calls to spin off the ginseng division and sell real estate assets to increase the company’s value.
But they did not make a full tender offer and few analysts think they seriously want management control, saying they are merely trying to increase the share price.
The pair was successful in having Mr Lichtenstein, who runs Steel Partners, a US hedge fund, elected as a board member of KT&G in March. The relationship between the company and its new director has got off to a tetchy start – KT&G recently said the Icahn team was “getting on our nerves” – but it will sharply deteriorate if the activists follow through with their latest plans.
Mr Lichtenstein is understood to have requested a slew of documents, including financial statements for the past three years, internal financial plans, balance sheets for each part of KT&G and all board meeting minutes.
People close to the activists say no documents have been supplied, with the management saying it was “confidential or untranslatable”. Correspondence between the two parties has become increasingly shrill as the stalemate worsens. Mr Lichtenstein is understood to have written to Kwak Young-kyoon, KT&G chief executive, stating: “If the other directors had any regard for my opinions, they would provide me with the requested company documents on which to formulate an opinion . . . ”
KT&G declined to comment or to say whether it had supplied any of the documents. “We agreed that matters about the board of directors will be co-ordinated within the board of directors,” the tobacco company said.
http://www.ft.com/cms/s/c255050a-feee-11da-84f3-0000779e2340.html