Samsung Electronics Up 6% on Rumor of Icahn Hostile Bid

Includes: EWY, KF
by: Steven Towns

Samsung Electronics jumped 6.4% to 687,000 won ($750), its highest close in more than two years, on a report of a possible hostile takeover bid by Carl Icahn and other hedge funds. South Korea's daily Chosun Ilbo broke the news, but SAMSUNG-chart-07-13-07 Samsung's executive VP of investor relations told analysts he is unaware of a hostile bid by Icahn, adding that Samsung "has an appropriate set of strategies in place that we'll implement." The Samsung Group owns 30.4% of Samsung Electronics, of which 3.2% is controlled by chairman Lee Kun-hee. Foreign investors are said to own a 49% stake. Samsung Electronics has a market cap of 101.3t won ($110b) based on Friday's close, meaning a hedge fund would need about $33b to achieve at least a 30% stake in order to gain managerial rights. Separately, Samsung reported better-than-expected Q2 earnings Friday, on strength in its LCD business, despite a 5% decline in net income on weakness in chips and mobile phones.

Sources: Chosun Ilbo, Associated Press,, Reuters
Commentary: Samsung Headlines Korea's Top Heavy ETFiPhone UnpackedSamsung's 1Q Spending Supports Thesis That Capex Spending Will Slow
Stocks/ETFs to watch: Samsung Electronics is not traded in the U.S., however it is a sizable component of iShares MSCI South Korea Index (NYSEARCA:EWY) [14.7% of assets as of 6/30 per Morningstar] and the closed-end fund Korea Fund Inc. (NYSE:KF) [12% as of 3/31].

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