Korean Fair Trade Commission Head Warns Of Hostile Take-overs

Kang Chul-kyu, the head of South Korea's Fair Trade Commission warns that Korean conglomerates may fall prey to hostile takeovers due to their obsession for managerial control.

Speaking on a South Korean radio show, Kang pointed out that by taking up more stakes in affiliates to defend their ownership, conglomerates are exposing themselves to a growing risk of merger and acquisitions by foreign parties.

Korea Herald notes Kang's statement "Their {the heads of the conglomerates] efforts to protect managerial control work against them because the larger the stakes in their affiliates, the larger the risk of a collective failure."

In turn, this risk might render the conglomerates vulnerable to hostile takeovers.

Interestingly, most South Korean conglomerates choose to take this risk, as shown in the owner families that gain managerial control via their stakes in affiliates that in turn hold shares in the most powerful subsidiaries.