(LEAD) Activist fund offers to acquire KT and G’s ginseng unit for 1.9 tln won

Flashlight Capital Partners (FCP), a Singapore-based activist fund, on Monday offered to acquire the ginseng business unit of KT and G Corp., South Korea's dominant tobacco company, for 1.9 trillion won (US$1.4 billion). Flashlight Capital, a KT and G shareholder, has submitted a letter of intent (LOI) to the tobacco firm's board of directors to acquire a 100 percent stake in Korea Ginseng Corp. (KGC), the fund said in a statement. KGC is wholly owned by KT and G, whose businesses ranges from traditional cigarette products to next-generation heat-not-burn product lil. The corporate logo of Flashlight Capital provided by the company (PHOTO NOT FOR SALE) (Yonhap) The corporate logo of Flashlight Capital provided by the company (PHOTO NOT FOR SALE) (Yonhap) The proposed acquisition price represents a 50 percent premium over the 1.2-1.3 trillion-won valuation mentioned by KT and G Chief Executive Bang Kyung-man during the company's Investor Day 2023, it said. Citing its "immense potential," FCP Managing Dir ector Lee Sang-hyun said in the statement, "We aim to develop Korea ginseng into a global brand, comparable to Manuka honey or Maotai." FCP has called on KT and G to spin off its wholly owned ginseng unit since 2022, arguing that the tobacco-ginseng pairing was a "wrong marriage" and that KGC's value is not reflected in KT and G's stock price at all. But KT and G's board rejected the proposal in 2023. In response to the acquisition offer, KT and G said in a statement that FCP "unilaterally" sent the LOI to the board Sunday night without any prior discussions with the company. "The company will take a closer look at the content of the proposal," it said. In July, FCP, which owns a 0.5 percent stake in KT and G, took issue with the current CEO compensation program, in which they argue the annual salary for the CEO is not connected with the company's stock prices. Source: Yonhap News Agency