A poison pill defense involves the sale to shareholders of price-discounted shares to protect a company from a hostile takeover by an activist individual investor, company, or institutional investor.“Financial watchdogs’ tougher regulations on treasury shares are also likely to speed up the search for white knights.”The government is considering requiring the cancellation of treasury shares to improve shareholder value, which could remove companies’ measures to protect their control.
Potential targets of hostile bids from private equity firms or hedge funds are likely to exchange their treasury shares with those white nights to protect management rights, the sources said.“South Korea does not have strong measures such as a poison pill to keep management control,” said one of the sources.
NAVERNaver, Korean Air, KCC and Kumho Petrochemical are likely to play an important role in other companies’ defense against such attempts, the sources said.Naver already holds a 3.08% stake in the country’s top hypermarket operator E-Mart Inc., 6.85% in fashion and cosmetics retailer Shinsegae International Co., 7.82% in brokerage house Mirae Asset Securities Co., 7.85% in logistics company CJ Logistics Corp., 4.99% in entertainment giant CJ ENM Co.and 0.99% in Korean Air’s holding company Hanjin KAL Corp.
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