South Korea's largest tobacco maker, KT&G Corp, said on Monday its board had rejected a takeover offer from US investors Carl Icahn and Warren Lichtenstein valuing the company at US$ 10 billion.

The bid is being closely watched since it could serve as a litmus test for other foreign hostile takeover bids for the country's top firms in which foreigners have a large stake, such as steel maker POSCO, analysts said.
In a country where nationalist sentiment runs deep, the first hostile foreign bid for a major local firm is facing fierce opposition, leaving analysts to question whether the US investors are merely looking to boost the shares to make a fat profit.
The company, which controls more than 70 per cent of the world's seventh-largest cigarette market, did not say how it intended to fend off the bid.
But KT&G could make a counter offer for its shares or make other concessions to the US investors, who also want the former state monopoly to spin off its lucrative ginseng unit and sell real estate, analysts said.
Billionaire investor Icahn, a corporate raider who recently settled a six-month battle to pressure changes at the world's largest media company, Time Warner, and Steel Partners II L.P., headed by Lichtenstein, offered last week to buy KT&G at 60,000 won (US$ 62.09) per share.
Jason Booth, a spokesman for Steel Partners, said by telephone that the investment group was reviewing KT&G's announcement. The US group is the second-largest shareholder in KT&G after Franklin Mutual Advisers LLC, which has 8.29 per cent.
KT&G is grappling with a falling market share in the world's seventh-largest cigarette market, valued at nearly US$ 1.9 billion, amid competition from foreign brands such as Philip Morris and British American Tobacco and a growing anti-smoking campaign.
The Icahn group also believes that KT&G could make better use of its idle real estate valued by analysts at US$ 700 million. (pi)