Proxy War over Hanjin Group Control May Be Rekindled
The share price of Hanjin Kal Corp., the holding company of Hanjin Group, keeps rising on the back of strong buying by an unidentified corporate body.
Hanjin Kal closed at 36,950 won on Dec. 2, up 3.07 percent (1,100 won) from the previous trading day. It was the highest level in six months after posting a 15.1 percent drop from 41,050 won to 34,300 won on June 21. The main driver of the stock price hike is an unidentified corporate buyer, which has continued net buying since Nov. 14 except Nov. 28. In total, Hanjin Kal shares purchased by this unidentified buyer during this period totaled 646,203 shares, or 1.09 percent of the total number of Hanjin Kal shares. On Dec. 2 alone, this buyer bought a total of 62,723 shares (worth about 2.23 billion won).
Market watchers say that the continued buying by the unidentified investor could be a factor in the proxy war between the Hanjin Group owner family and Korea Corporate Governance Improvement (KCGI), an activist private investment fund established by Kang Sung-boo that is seeking to take away control of Hanjin Group from its owner family.
The number of players engaged in the proxy war has increased following the death of the group’s chairman Cho Yang-ho. The 17.84 percent stake held by the late chairman was inherited by his spouse, Lee Myung-hee, and the three children, including incumbent Hanjin Group chairman Cho Won-tae.
As of Nov. 14, four shareholders have more than 5 percent of Hanjin Kal's shares: Cho Won-tae and other members of the owner family (28.94 percent), KCGI (15.98 percent), Delta Air Lines (10 percent) and Bando Engineering & Construction. (5.06 percent).
Choi Nam-gun, a researcher at Yuanta Securities, said, “We thought that the proxy war over the control of Hanjin Kal has virtually ended. However, if the unidentified buyer keeps acquiring the company’s stock like this, the proxy war could be rekindled depending on whom the unidentified buyer is.”
Delta Air Lines has purchased Hanjin Kal's shares since June, and currently holds 10 percent. Delta was initially known as a white knight of the Hanjin Group owner family. So when it announced its plan to acquire Hanjin Kal shares, the company’s share price dropped to 25,900 won at the end of July due to the observation that the control competition ended with the Hanjin Group owner family's victory.
However, Delta declared it would remain neutral in the proxy war and KCGI also decided to secure additional stake. In October, a subsidiary of Bando Engineering & Construction announced that it had a 5.06 percent stake in Hanjin Kal (2,995,000 shares). Bando said it has acquired Hanjin Kal shares for an “investment purpose," but the company was regarded as an ally of KCGI.