Investor That Can See The Future

Chapter 116

Taehyung asked, confused.

“Why is Eunseong Cha here?”

I am of the same opinion.

Why is Eunsung Cha getting involved in the dispute over the management rights of Seoseong SB?

“As you know, Seoseong SB is the world’s 5th largest electric vehicle battery producer. And Eunsung Motors is hoping to expand the production of electric vehicles.”

The change from internal combustion engine vehicles to eco-friendly vehicles (electric vehicles, hydrogen vehicles) is an irresistible trend. Eunsung Motors also started mass production of electric vehicles belatedly and is currently selling two models.

The reason why automakers do not welcome the change to electric vehicles is simple. This is because sales profits must be shared with battery makers.

In electric vehicles, batteries account for more than 30% of the cost. And that amount of money flows into the pockets of the battery makers. From the perspective of automakers, the stomach hurts.

So, are you planning to take over Seoseong SB?

Vice Chairman Im Jin-yong explained the situation.

“My mother is planning to make the youngest brother Seoseong SB CEO.”

Currently, the CEO of Seoseong SB is Chairman Lim Il-kwon. Currently, Bok-in Lee, who has resigned from the front line of management, is acting as the acting president.

Taek-gyu asked curiously.

“Why did my mother betray me… … No, are you on the side of her brother?”

Vice Chairman Im Jin-yong smiled bitterly.

“There are many reasons.”

The first Vice Chairman Im Jin-yong and the youngest, Lim Seung-yong, President of Seoseong Heavy Industries, have a 13-year age gap. Being a late sibling, her mother Yeonso-hyeon loved her youngest son terribly. Vice Chairman Im Jin-yong, on the other hand, is well known for having a bad relationship with his mother.

Family matters are sensitive, so why don’t we ask this any further?

Taek-gyu asked something else instead.

“I’m on the side of my brother, though. What is the relationship between your mother and Eunseong-cha?”

“My mother’s sister, that is, my aunt, is the hostess of the Eunsung Tea Group.”

The Chojung Ilbo is the largest newspaper publisher in Korea and a media company that owns two general-purpose channels.

It is less influential now, with the development of the Internet and SNS, but only a few decades ago, public opinion was swayed by a single article.

As it was a time when the chaebol and the media were mutually beneficial, Chairman Yeon Tae-min was able to marry his two daughters to the chaebol family. The first daughter, So Yeon-hyeon, is married to Im Il-kwon, the successor of Seoseong Group, and the second daughter, Yeon-jin, is married to Han Min-goo, the successor of the Eunsung Group.

In other words, Chairman Han Min-koo is the brother-in-law of Chairman Im Il-kwon.

The two chaebol groups representing Korea sometimes cooperated and sometimes competed, but Yeon-Hyun Yeon and sister Yeon-Jin remained close friends.

Jo Yeon-hyeon’s official title: Director of the Seoseong Art Museum.

As an art museum run by the Seoseong Group, exhibitions of famous domestic and foreign artists were frequently held, and each time, Yeon-Jin attended and showed off her sister’s friendship.

It is likely that her younger brother had a great influence on the decision to join hands with Eunseong Cha Group, the director of Yeon Yeon-hyeon.

“What is the current stake in Seoseong SB?”

“My mother owns 5.8 percent and my sister has 4.7 percent.”

“Who are you?”

“My stake is 0.8 percent.”

Taehyung was surprised.

“Is that all you can do?”

Vice Chairman Im Jin-yong smiled.

“And Seosung Electronics owns 15.9 percent.”

The reason why chaebols in Korea can control numerous affiliates with their tiny stakes is because there is a good system called circular shareholding.

In any case, since Vice Chairman Im Jin-yong is exercising the management rights of Suseong Electronics, the combined share of the two is 16.7 percent, which exceeds 10.5 percent of the mother and brother’s shares.

“Then there is no problem, is it?”

“But if the largest shareholder is on the side of the younger brother, there will be problems.”

“Ah!”

That was it!

Contrary to me, who knew right away, Taek-gyu tilted his head.

“Who is the largest shareholder?”

“lets think. Who is the largest shareholder of domestic conglomerates?”

Vice Chairman Im Jin-yong said.

“It’s a national pension.”

The national pension assets are over 600 trillion won.

This is one of the top three pension funds in the world. The National Pension Service invests these enormous assets in domestic and foreign stocks, real estate, and bonds.

Since the amount of money under management is so large, I own more than 5% of the stock of any large corporation.

“How much is the National Pension Stake?”

“It’s 16.1 percent. It was originally around 10 percent, but it has increased dramatically over the past year.”

“… … .”

bought a lot

The national pension is a diversified investment principle. Therefore, it is rare to buy more than 10 percent of a company’s shares.

“The National Pension Service will not be able to exercise its voting rights well.”

The National Pension Service is the largest shareholder of many large corporations. If I had a 9% stake in Seosung Electronics, I was done. (This alone is 30 trillion won)

Of course, it is possible to exercise the voting right as much as the stake it has, but it has hardly played a role.

“Not long ago, at a cabinet meeting, President Park Si-hyeong mentioned the stewardship code.”

Taehyung looked at me.

“Steward what… … ?”

“Stewardship Code. It means institutional investors should act like good butlers.”

“What do you mean?”

“In a word, it means to actively exercise your voting rights.”

President Park Si-hyeong pointed out that he has suffered several losses in recent years, and criticized the chairman of the National Pension Service for saying that he should do his best to manage it as it is the people’s retirement funds.

That’s right, of course.

Who can oppose the idea of protecting the people’s retirement funds? But there must have been such a deep meaning here.

That’s why politicians need to be swept away.

As can be seen from the past events, President Park Si-hyung is thoroughly acting for the benefit of Eunsung Cha. In addition, Pyo Mun-hyeong, chairman of the National Pension Service, and Kang Min-soo, head of the fund management division are all close aides to President Park Si-hyeong.

Chairman Lim Il-kwon is a symbol of Korean economic history. No one can deny the fact that he has grown Suseong Group this much and made Seosung Electronics a world-class company.

No matter how much the National Pension Service exercises its voting rights, it is highly likely that the dismissal of the discretionary right will face strong opposition.

But after he dies, it’s a different story.

When the CEO dies, it is natural for a new CEO to be elected. It’s just a matter of whether you’re on the side of his older brother or younger brother.

Waiting for a day like this to come, did you continue to increase your stake in Seoseong SB?

I counted again.

If you combine the stake in the National Pension Service, the hostile stake will increase to 26.6 percent. Vice Chairman Im Jin-yong, on the other hand, was 16.7 percent.

Unless you secure a friendly stake, you will have no choice but to be pushed out of the stockholders’ meeting.

Taek-gyu asked curiously.

“But even if the younger brother becomes the CEO of Seoseong SB, isn’t it directly related to Eunsung Cha?”

accurate opinion. I’ve been wondering about that too.

“My mother is planning to marry her younger sister, Hyo-Lin Han.”

It’s the first name I’ve ever heard.

“If it’s Han Hyo-rin… … ?”

“I am the second daughter of Eunsung Card President Han Jeong-gu.”

Chairman Han Young-joo, the founder of Eunsung Group and the richest man in Korea, was also a wealthy child.

They have five sons and three daughters. (There are countless children out of wedlock here.) Having many children may be a happy thing for parents, but as a group president, he could not help but worry about the successor structure.

The successor to the original Eunsung Group was Han Min-koo.

As his eldest son and excellent managerial skills, it seemed natural for him to inherit the group. But suddenly, in the last years of his life, something went wrong, Chairman Han Young-joo appointed the fourth Han Eun-goo, not Han Min-goo, as the group’s successor.

For Han Min-goo, it was like going crazy and jumping around.

I couldn’t let the whole group fall into my younger brother’s hands like this. So he gathered his other younger brothers as well as his vassals to quarrel with his fourth brother and his father for control.

As a result, the Eunsung Group, which was nothing more than an empire, was virtually disbanded.

At this time, the first Han Min-gu took Eunsung Car, the second Hanhyeon-gu took Eunseong Department Store, the third Hansang-gu took Eunsung Heavy Industries, and the fifth Hanjeong-gu took Eunsung Capital.

Han Eun-goo barely saved the Eunsung Group chairman position and its core affiliate, Eunsung Construction, from the hands of his brothers, but it was only a wounded victory.

Afterwards, Eunsung Construction and Eunsung Electronics went bankrupt and the Eunsung Group collapsed, while Han Min-koo raised Eunsung Motors as a group company with excellent management skills, and the current Eunsung Motors Group has surpassed the Eunsung Group in its heyday.

Returning to the story of Hanjeong-gu, Eunsung Capital was on the verge of bankruptcy in the early 2000s when the credit card crisis broke out.

When the situation became serious, Han Jung-gu asked Han Min-goo for help. It was a declaration of surrender, asking for help, because words would help, and they would go under.

Chairman Han Min-koo accepted the request and provided group funds to take over Eunsung Capital. However, he separated Eunsung Capital from Eunsung Card because his younger brother’s management ability was not good enough, and he left only Eunsung Card management to Han Jeong-gu.

Han Hyo-rin is Han Min-goo’s nephew and Han Chan-young’s cousin.

Are you saying that you are going to attract Seoseong SB to Eunsung car through marriage?

But that alone is not enough.

“If the two get married, we will sell the treasury stock held by Seosung SB to Eunsung Motor Group. The stock price of Seoseong SB is currently bottoming out, so there will be no pressure to buy it.”

As the saying goes, the stock, which once hit 320,000 won, is now hovering below 170,000 won. The reason why the stock price has fallen is that it is struggling to sell EV batteries.

China intentionally excluded Korean batteries from subsidies in order to boost its battery makers.

Here, Seosung SB was going to supply batteries to Eunsung Motors and even signed an MOU (Memorandum of Understanding), but for some reason, Eunsung Motors turned their backs on the last minute and signed a contract with CL Chemicals.

Was that a plan to lower Seoseong SB’s stock price?

“How much is treasury stock?”

“It’s 6.3 percent.”

It is a kind of wedding gift.

Taek-gyu asked as if he didn’t understand.

“Can’t we defend ourselves with treasury stock?”

Good idea though.

“Treasury shares do not have voting rights.”

Treasury stocks for which the company acquires treasury stocks are excluded from voting and dividends.

Vice Chairman Im Jin-yong said as if he had a headache.

“Eunsung Motor Group will first secure treasury stock and then increase its stake in Seosung SB through exchange-traded purchases and issuance of new shares. If the National Pension Service goes on sale after work, the stock price will fall further.”

If this happens, the National Pension Service will suffer a huge loss… … What does it have to do with people’s money anyway?

I stuck my tongue in. Personal feelings aside, Chairman Han Min-koo’s management ability is surprising.

Vice Chairman Im Jin-yong looked at me and said.

“What I would like to ask you is that the OTK Company purchase the treasury stock of Seosung SB.”(Read more @ wuxiax.com)

Selling treasury stock to a third party to secure a friendly stake is a common method used to defend management rights.

A typical example is when game company Dexon threatened LC Soft’s management rights, and President Kim Jin-taek exchanged treasury stock with Let Marble.

“Are you asking me to play the role of a white knight?”

“A white knight? White Night?”

“right.”

Shareholders who help defend management in hostile M&A are called White Knights. The shareholder on the other side is, of course, the Black Knight.

Hearing my explanation, Taek-gyu nodded his head.

“Oh yeah? I’m talking about Gandalf again.”

“Why is Gandalf here?”

“That grandfather’s nickname is White Knight. He must have been nicknamed that way because he fought against Sauron, a hostile M&A of Middle-Earth.”

“… … .”

Please stop.

Vice Chairman Im Jin-yong smiled.

“The Lord of the Rings masterpiece. I like it too.”

Actually I like it too.

I did arithmetic calculations. After a few additions, the answer came quickly. Treasury stock combined is 23%. It is less than 26.6 percent of the hostile stake.

“That alone wouldn’t be enough to defend.”

“That’s why I would like to ask you to purchase in the market.”

At least 3.6% of the stock to be bought on the stock exchange.

Currently, Seoseong SB’s market cap is 22 trillion won.

To buy a 10% stake, you have to invest more than 2 trillion won.

“The 26.6 percent of the hostile stake may not be everything. Could it have been that we could have secured another stake?”

Vice Chairman Im Jin-yong nodded his head brightly.

“That’s right.”

In other words, using Article 2 does not guarantee success in defending management rights. If you do it wrong, you may end up only taking stocks.

“Why are you asking us to do this?”

“I need an ally who will not betray me.”

Vice Chairman Im Jin-yong looked at me and said.