Investors urge KT&G to spinoff ginseng business

Feb.28.2023

Investors demand KT&G split profitable ginseng business, appoint external directors, and improve shareholder return policies.

Several activist investors have filed an injunction with the Daejeon District Court in South Korea, demanding that KT&G address their grievances by spinning off its profitable ginseng business, appointing certain external directors, and strengthening its shareholder return policy.

Investor group led by Singaporean private equity firm Flashlight Capital has repeatedly urged the company to spin off its ginseng business to restore the company's value and stock price.

However, during last month's investor relations event, KT&G refused this request. KT&G Senior Executive Vice President Bang Kyung-man stated, "In the long run, splitting the company has almost no benefit for the company's value or shareholders.

Bang expressed concerns that if the ginseng business department separates, KT&G may lose its "synergy".

During the meeting, KT&G rejected a request from the fund to strengthen KT&G's shareholder return policy. The tobacco manufacturer stated that the current policy "should be temporarily retained.

Lee Sang-hyun, the founder of Flashlight Capital, believes that once KT&G adjusts its investment portfolio to better achieve its environmental, social, and governance goals, its stock price will rebound beyond 140,000 Korean won, which was last seen in 2016.

The stock price of KT&G reached its lowest point on February 17 at KRW 87,100, but has since slightly recovered.

Reference:

Investors are urging KT&G to proceed with the spinoff of their ginseng business.

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