By Lee Hyo-sik
One in five affiliates of major conglomerates are vulnerable to corporate raids by foreign investors because controlling families and their affiliates hold smaller stakes than non-Korean shareholders.
According to Chaebol.com, a corporate research information provider, Sunday, 16 out of 96 listed firms affiliated with Korea’s top 10 business groups face the risk of being taken over by foreign corporate raiders.
Foreigners hold greater combined stakes in 16 companies than controlling families and other friendly equity holders.
By group, six of Samsung Group’s 18 units are exposed to a possible hostile takeover by foreign shareholders, followed by three each at Hyundai Motor Group, SK Group and LG Group.
Chaebol.com released the findings, several days after U.S. hedge fund Elliott Management said it acquired a 7.12 percent stake in Samsung Construction & Trade (C&T) and opposed the firm’s planned merger with Cheil Industries.
The news has sent shockwaves across the corporate world in Korea as Samsung Group will likely face a hard time integrating the two units, which is key to facilitating the third-generation management succession to Samsung Electronics Vice Chairman Lee Jay-yong from his ailing father Lee Kun-hee.
Foreign investors, including Elliott, hold a combined 33.08 percent stake in Samsung C&T, compared with 19.63 percent held by controlling families and Samsung Group companies.
Samsung SDI and Samsung Nonlife Insurance hold 7.39 percent and 4.79 percent in the group’s construction and trading arm, respectively, while Chairman Lee has 1.41 percent. The National Pension Service also has a 9.98 percent stake.
Chaebol.com said foreigners hold a combined 51.82 percent stake in Samsung Electronics, compared to 29.57 percent held by its chairman and family members along with group affiliates.
In addition, Hotel Shilla, headed by Lee Boo-jin, the eldest daughter of Samsung Group Chairman Lee, is also vulnerable to a potential hostile takeover by foreigners. Foreign investors hold a combined 39.09 percent stake in the company, compared with 18.53 percent held by controlling families and Shilla affiliates.
It is not much different for three key units of Hyundai Motor Group: Hyundai Motor, Kia Motors and Hyundai Mobis. Hyundai Group Chairman Chung Mong-koo and his families, and group units have a combined a 32.02 percent stake in Hyundai Mobis, compared with 50.16 percent held by foreign investors.
Hyundai Motor’s foreign stake ownership has reached 44.44 percent, while Kia Motors is 38.44 percent, according to Chaebol.com.
SK Group, which had a high-profile hostile takeover attempt by Sovereign Asset Management in 2003, continues to remain exposed to possible attacks. Foreign investors currently own a combined 53.29 percent stake in SK hynix and 44.55 percent in SK Telecom.