The Merger Proposal (2)
“Elliott is one thing, but what the hell are KSGI doing? Are they seriously trying to interfere in management?”
Vice Chairman Ju Cheol-jin ground his teeth in silence.
Hanjeong Group was a kingdom his grandfather had built and his father had inherited. Since childhood, watching his father and grandfather, he had assumed it was only natural that he would be the next king.
But now that obvious future was about to be taken from him. Worse, if things went badly, he might even be driven out of the kingdom altogether.
Chairman Ju Min-jae, who had been listening quietly, finally spoke.
“Calm down.”
“But…”
“If you’re going to fly off the handle over something this small, how do you expect to handle anything serious later?”
Age had taken some of the edge from his voice, but the authority in it remained unmistakable.
Vice Chairman Ju Cheol-jin lowered his head and fell silent.
“Yes, sir. Understood.”
Chairman Ju Min-jae looked around at the executives.
“If anyone has a good idea, speak up one by one.”
The executives exchanged glances before cautiously offering their suggestions.
“We should secure voting rights by selling Hanjeong Mulsan treasury shares to friendly investors.”
“We’ve already started advertisements emphasizing the positive effects of the merger on broadcasters, newspapers, and portals. We plan to keep the publicity campaign going right up to the shareholders’ meeting.”
“I’ll meet with the major investors again and get firm commitments one more time.”
“We need to persuade the minority shareholders and collect their proxies.”
“If speculative capital interferes in management, we should quietly tip off the labor union that there could be mass layoffs through restructuring. If the union rises up, public opinion will swing in favor of the merger.”
Executive Director Hwang Pyeong-su spoke up.
“What about asking the Financial Supervisory Service and the prosecutors to investigate Elliott?”
Elliott had taken its stake from 4.97 percent to 6.1 percent in just two days. Under normal trading, that simply wasn’t possible.
In the financial world, the prevailing assumption was that Elliott had increased its stake through a TRS (Total Return Swap). In other words, another financial institution had bought the shares on its behalf, only for Elliott to take them over all at once later.
The reason for using such a roundabout method was simple: to avoid disclosure.
Under Korean stock-market regulations, anyone who holds more than 5 percent of a listed company’s shares must disclose both the size of the holding and the purpose of the stake.
If Elliott had bought the shares openly on the market and filed disclosure, Hanjeong Group would have grasped the situation immediately and prepared countermeasures.
But because Elliott had kept its head down right up to the 5 percent threshold, then suddenly surged its stake, Hanjeong Group had failed to respond properly.
“A TRS itself isn’t illegal, but there could have been share parking or side agreements involved in the process.”
“Do you really think those bastards would leave evidence lying around? Even if we investigated, we’d probably never be able to prove anything.”
“Either way, it’ll take years before any result comes out. But if the prosecutors even announce that they’re investigating, we can strongly frame this as foreign speculative capital using illegal methods to interfere in the management of a domestic conglomerate.”
Legal or not, the plan was to paint it as illegal.
Chairman Ju Min-jae nodded.
“That’s not a bad method.”
Chief Park Woon-yong added, “The most important thing right now is the National Pension Service. If the National Pension Service votes in favor, then with the friendly shares and treasury shares included, we can secure nearly 50 percent of the total.”
The National Pension Service was one of the world’s largest pension funds and wielded enormous influence over the Korean economy.
It held 9.9 percent of Hanjeong Mulsan, making it the second-largest shareholder. Naturally, everyone’s eyes were fixed on which side it would support in this matter.
Most of the time, the National Pension Service didn’t exercise its voting rights.
If Hanjeong Group had already had the matter locked up, it would have stayed neutral. But this time, they needed help.
When the meeting ended, everyone rose from their seats.
Once they were alone, Vice Chairman Ju Cheol-jin asked with a worried expression, “Will we really be all right? Elliott and KSGI both seem dead serious.”
From the way things looked now, it didn’t seem as if they were merely trying to drive the stock price up and then walk away. Were they really planning to fight it out by vote at the shareholders’ meeting?
Chairman Ju Min-jae let out a long breath.
“I suppose I’ll have to meet the president in person.”
“Will the president agree?”
“He will. He’s taken more than enough from us already.”
Hanjeong Group ranked tenth among Korea’s conglomerates.
But its influence over politics and the media was so strong that it was said to rank among the top five in the business world when it came to lobbying power.
In particular, it had supported President Oh Young-hwan continuously since his days as a lawmaker.
After he took office, they had faithfully followed government policy, built factories in his hometown to create investment and jobs, and donated huge sums of political money to the ruling party.
All of it had been done for this moment, for the sake of receiving help when they needed it most.
Chairman Ju Min-jae thought of President Oh Young-hwan.
For all his faults, the man was the type who drew a sharp line when it came to his own share.
“He’ll make a few demands, but the government won’t want to see a major domestic conglomerate fall into foreign hands either. Are you worried?”
Ju Cheol-jin nodded.
“Honestly, yes.”
“Think of it as a good experience. When you do business, you run into con artists and bandits sooner or later.”
“I understand.”
In truth, he had seen all sorts of things while building Hanjeong Group alongside its founder and his father, Ju Hui-sun.
During the military regime, they had fallen out of favor with the administration and been shut out of various state-backed projects. Then, when the country transitioned to civilian rule, they had come under investigation for slush funds, been held responsible, and forced to step away from the company for a time.
During the IMF crisis, countless conglomerates collapsed, but Hanjeong Group turned the crisis into an opportunity and grew even stronger, eventually rising into the ranks of Korea’s top ten business groups.
He had done everything he needed to do. Now, if he could only hand management over to his successor and retire, everything would be over.
The old man patted his eldest son’s shoulder affectionately.
“There’s no need to worry too much. Once this merger passes, nobody will dare to challenge Hanjeong Group.”
Hanjeong Group moved quickly to secure friendly votes.
That effort included selling the 5.5 percent of treasury shares held by Hanjeong Mulsan. If they sold treasury shares, which carried no voting rights, to friendly parties, they could secure an equivalent amount of friendly voting power.
Elliott, as if it had been waiting for exactly that, immediately filed for an injunction in court to block the sale of Hanjeong Mulsan treasury shares.
The Blue House suddenly convened an unscheduled meeting with business leaders, and Chairman Ju Min-jae, dragging his ailing body behind him, headed there in person.
Meanwhile, Elliott and KSGI asked the global management consulting firm McCauley Consulting for its opinion on the merger and sent an official letter to the National Pension Service, demanding that it oppose the unfair proposal.
Hanjeong Group, for its part, bought up every ad slot it could find on broadcasters, in newspapers, and on portals, hammering away at the supposed necessity of the merger.
The public relations staff met reporters every day and treated them to meals and drinks.
The media outlets that had landed those massive ad contracts did exactly what was expected of them as corporate PR arms, highlighting only the favorable side of the merger.
From local giant to global player. The new Hanjeong will lead the way!
Hanjeong Group, reborn!
The merger is the mighty flap of wings that will launch us into the sky!
Hanjeong will run together for the future of the Republic of Korea!
In interviews, KSGI representative Kim Sung-gwun pointed to Chairman Ju Min-jae and Vice Chairman Ju Cheol-jin’s embezzlement, breach of trust, verbal abuse, assault, abuse of power, and related-party deal pushing, along with their many management failures.
It looked as though they were swinging swords and shields at each other with savage intensity, like gladiators in the Colosseum. Then again, when you considered the amount of money on the table, it wasn’t strange at all for them to be fighting with their lives on the line.
Articles poured out, and the internet caught fire.
Lee Dong-ho went to work at DA Securities.
The Hanjeong Group control battle was a major issue not just in the business world, but in the financial sector as well.
Every time the employees gathered, they talked about nothing else.
“KSGI and Elliott are getting serious.”
“Hanjeong Group left a lot of openings, though. They’ve stirred up trouble more than once because of problems with the founding family.”
“And the management’s a mess too. They just kept expanding their affiliates like an octopus with too many arms.”
“Elliott has practically never failed until now. If they even bought up shares from the Dutch pension fund, they were clearly dead set on this.”
“Still, it won’t be easy in Korea. It’s called a chaebol republic for a reason.”
“Isn’t the key to the merger in the hands of the National Pension Service?”
“They’ll side with Hanjeong Group anyway. I heard both the ruling party and the opposition are lobbying them right now.”
“I should’ve bought some Hanjeong Mulsan before the merger announcement.”
Lee Dong-ho swallowed hard.
Everything really is unfolding exactly the way Miru said it would.
None of his coworkers knew it, but he was deeply involved in this affair.
Who would’ve thought I’d be thrown into the middle of a control battle involving one of the top ten conglomerates?
It was absurd, almost laughable. And yet, for reasons he still couldn’t quite explain, it was happening in the real world right now.
Hanjeong Mulsan, which had done nothing but fall, had become a hot stock that rose every morning as soon as people woke up.
The share price had already nearly doubled from its low.
Fortunately, Dong-ho had gone far beyond simply using his own money. He’d taken out loans, used margin, and gone all in on 100 million won’s worth of shares.
Through a nominee account, just in case anything went wrong.
If he had only heard about it in passing, he would have brushed it off.
But nobody could quietly buy more than 300 billion won of a single stock without having solid information.
So he’d hopped on board quickly, and the result had been a success.
Dong-ho folded his arms and thought it over.
I’ve already burned through all my overdue vacation days, so maybe I should just hand in my resignation and join them, shouldn’t I?
A company founded by his junior colleague now looked far more promising than DA Securities, which had history and tradition on its side.
There was no time left to hesitate.
He was about to write his resignation letter when Assistant Manager Woo Baek-hyeon called him over.
“Write up a recommendation report supporting the merger between Hanjeong Mulsan and HG Logics.”
“Excuse me?”