ID :
190377
Wed, 06/22/2011 - 13:02
Auther :
Shortlink :
https://oananews.org//node/190377
The shortlink copeid
Biz lobby calls for steps to fend off 'destructive' takeovers
SEOUL, June 22 (Yonhap) -- South Korea's largest business group urged the government Wednesday to introduce a poison pill scheme and defensive measures against "destructive" takeovers of local firms by foreign funds.
In a report, the Federation of Korean Industries said South Korea has faced hostile mergers and acquisitions (M&As) since a related law was loosened following the 1997-98 Asian financial crisis in a bid to encourage restructuring.
As an example, the report cited U.S. company Lone Star Funds, which took over Korea Exchange Bank (KEB) in 2003 and seeks to sell the country's fifth-largest bank to Hana Financial Group Inc.
The U.S.-based buyout fund has raked in 1 trillion won in dividend payments by KEB, which paid 45 percent of its total net income as dividends, about 2.5 times the average dividend payout by local banks, it said.
"In order to prevent such destructive takeovers, measures such as a poison pill scheme and disproportionate voting rights should be introduced," the report said.
A poison pill system gives shareholders the right to buy new shares quickly at a discount when they face an unsolicited takeover bid. Under the disproportionate voting rights, some shareholders are given more than one vote in order to defend their management against hostile M&A attempts.
A revision bill of the country's commercial law that introduced the poison pill system passed the Cabinet earlier this year but has been awaiting parliamentary approval.
brk@yna.co.kr
In a report, the Federation of Korean Industries said South Korea has faced hostile mergers and acquisitions (M&As) since a related law was loosened following the 1997-98 Asian financial crisis in a bid to encourage restructuring.
As an example, the report cited U.S. company Lone Star Funds, which took over Korea Exchange Bank (KEB) in 2003 and seeks to sell the country's fifth-largest bank to Hana Financial Group Inc.
The U.S.-based buyout fund has raked in 1 trillion won in dividend payments by KEB, which paid 45 percent of its total net income as dividends, about 2.5 times the average dividend payout by local banks, it said.
"In order to prevent such destructive takeovers, measures such as a poison pill scheme and disproportionate voting rights should be introduced," the report said.
A poison pill system gives shareholders the right to buy new shares quickly at a discount when they face an unsolicited takeover bid. Under the disproportionate voting rights, some shareholders are given more than one vote in order to defend their management against hostile M&A attempts.
A revision bill of the country's commercial law that introduced the poison pill system passed the Cabinet earlier this year but has been awaiting parliamentary approval.
brk@yna.co.kr
