[FOUNTAIN]Wrestling for money

Legendary wrestler George Hackenschmidt was known for his rib-crushing bear hug. He would hug his opponent from the back around the waist and tighten his arms. Hackenschmidt was a former body builder, all muscles ― whoever was caught within his “hug” could not escape. With this skill, he did not lose a single match and became the world champion in 1905.
Back then, the press nicknamed him “The Russian Lion” after the Russian style of greeting one another with a deep embrace. Thanks to Hackenschmidt, the bear hug became a major move in professional wrestling.
In the securities market, a “bear hug” is similarly powerful. It is an offer to buy the shares of a company at a significant premium when the management may be unwilling to sell. The offering party can usually force an agreement because the management is legally bound to act in the interest of the company’s shareholders. It is hard to escape once embraced by the bear hug. It comes in the form of a letter that says when and at what price the buyer will take over the company. Since these letters are sent confidentially, the specific contents are hardly ever revealed.
However, the person who uses this technique does not always win. Instead, sometimes the takeover artists get their ribs crushed. A good example is the Hilton Hotel. In November 1996, the CEO of Hilton Hotel Stephen Bollenbach wrote a letter to Rand Araskog, the CEO of ITT, which owned the Sheraton Walkerhill Hotel. “Dear Araskog, We were disappointed at your refusal, but we still believe that our proposal would be beneficial to ITT. We hope that ITT would immediately stop defending against our takeover bid.”
However, Araskog was firm. Selling everything that he could, he stood up to the bold bid by Hilton. Bollenbach extended the bid period three times and had a proxy confrontation, but gave up in November of the following year after a great loss. The ten-month long takeover bid was the longest in American history.
The KT&G situation is getting worse by the day. Carl Icahn, the American corporate raider, recently bear hugged KT&G. Together with other investors, he offered to buy KT&G stock at 60,000 won ($62) per share. Icahn even slipped the news to the press. When KT&G refused strongly, Ichan expressed disappointment. His words might be saying “It’s disappointing” but the meaning is not any different from “Let’s see.” Until Ichan has won, he does not seem to be willing to loosen the hug. Who will it be, Icahn or KT&G, who will soon end up with crushed ribs?

by Yi Jung-jae

The writer is a deputy business news editor at the JoongAng Ilbo.