Hostile Takeovers in Korea: Turning Point or Sticking Point in Policy Direction?

Mergers and acquisitions are burgeoning in Korea after the involuntary restructuring of major conglomerates and financial institutions which occurred after the 1997 financial crisis. Many companies owned by government agencies are likely to be privatised in the coming years and the current administration aims to sell utilities and infrastructure projects to the private sector. Policies for certain government-owned financial institutions are currently being questioned as well. Despite the temporary crunch of capital markets in Korea, mergers and acquisitions will be at the core of Korean economic activities in the next decade. Amidst these developments, however, some have voiced concern about hostile takeover attempts, especially by foreign capital. The past and current regulation of hostile takeovers has been weighed down by securities regulations and corporate laws. Arguments for poison pills are being regurgitated in light of economic reality, which is that there is no separation between management and ownership. This paper argues that such concerns are not relevant to the Korean economy and there is no need for further changes intended to discourage hostile takeover attempts. [ABSTRACT FROM AUTHOR]