July 13, 2007 – At the same time it explains how it posted a six-year low in fiscal-year profits in 2Q07, Samsung Electronics finds itself possibly on the wrong end of a takeover attempt for its parent group, according to local reports.
Apparently the rumors caught fire in a story from the local daily Chosun Ilbo, which suggested that Carl Icahn might be launching a bid for Samsung Electronics. (Icahn is well known and disliked locally for threatening a similar takeover a year ago for tobacco company KT&G unless shareholder returns improved.)
The Korea Times noted that Samsung believes it has “appropriate strategies” to block any hostile takeover attempts, and suggests that an unwelcome takeover is unlikely given Samsung’s massive size, loyalty to management, “and South Korea’s xenophobic business environment.”
Foreign investors, who already own 49.26% of Samsung Electronics, also could sweep in with an M&A move indirectly by acquiring a controlling stake in Samsung Corp., the second-biggest shareholder of the chipmaker in the Samsung group (4.02% stake), the Korea Times notes. To defend itself, Samsung is likely to make that unit into a virtual holding firm, a popular practice in Korea among major conglomerates to improve governance, the paper says.
This is a growing concern among Korea’s “chaebol” industrial groups, who claim they’ve become more vulnerable to hostile takeovers due to government regulations limiting internal voting rights in affiliates to 15%, down from 25% a year ago, notes the Economic Times.