South Korea`s top tobacco maker, KT&G, is bracing for a voting showdown over managerial rights with billionaire US investor Carl Icahn and his allies amid fears of possible hostile takeovers of local companies.

KT&G has accepted Carl Icahn`s request to hold an annual shareholders meeting to replace board members. This has allowed candidates recommended by the US investor to compete for seats on the board, while nominating its own candidates for the showdown slated for 17 March.
KT&G chief executive Kwak Young-kyoon left South Korea Wednesday to meet investors in New York, London and Hong Kong to woo their support. "Kwak would use his 14-day trip to overseas investor relations sessions to explain KT&G`s corporate activities to foreign investors," a company official said.
The company`s union has also vowed to defend the South Korean management against any 'hostile' takeover attempt by foreign investors. South Korea`s labour groups have long been embroiled in bitter labour disputes with management and are often accused of militant protests, forcing local and foreign investors to leave the country.
The giant tobacco and ginseng group has hired Goldman Sachs Group Inc., the world`s largest takeover adviser, to gain advice on warding off Icahn`s funds.
Icahn and his partners, including Warren Lichtenstein, head of investment group Steel Partners, currently hold a combined 6.59 per cent of KT&G`s voting shares, while US investment firm Franklin Mutual Advisers holds more than 7.1 per cent. The funds have bought KT&G shares since mid-2005. The tobacco manufacturer is vulnerable to takeover bids by foreign investors because foreign investors have a 63.1 per cent controlling stake in the firm.
Despite signs of possible takeover bids, the former state monopoly remained idle in restructuring management and reducing costs in the face of shareholder demand. The company, privatised in 2002, has a domestic market share of about 75 per cent. KT&G is valued at about US$ 8 billion by market capitalisation.
KT&G was stunned last week when Icahn`s funds declared they will use their combined 6.59 per cent stake to influence KT&G`s management through the ownership by having a say in issues, such as a possible merger and acquisition. Icahn, nicknamed 'Shark' by the world media, is known as a corporate invader.
Icahn`s funds have urged KT&G to spin off and list its profitable ginseng business and pay more dividends. (pi)