KT&G Rejects FCP's Proposal to Acquire Insamgongsa... "Regret Over False Information Disclosure"

Response Letter Regarding Letter of Intent for Investment
Policy of Practical Impossibility
Best Efforts to Foster Three Core Businesses Including Health Functional Foods

KT&G has clearly expressed its refusal to the Singapore-based activist fund Flashlight Capital Partners (FCP), which has proposed acquiring its subsidiary KGC Ginseng Corporation for nearly 2 trillion won.

On the 8th, KT&G announced that it sent a reply letter on the 13th of last month to FCP's letter of intent, stating that it will "do its best to foster the three core businesses, including health functional foods."

In the reply, the company emphasized, "Last year, we announced a mid- to long-term growth strategy to develop health functional foods along with overseas cigarettes and NGP (Next Generation Products, heated tobacco products) as the three core businesses," adding, "We will make every effort to achieve these goals." This effectively rejects the proposal to sell Ginseng Corporation.

KT&G also dismissed FCP's claim made through a press release that the company values Ginseng Corporation at 1.2 to 1.3 trillion won, stating, "This is merely a citation of some analysts' evaluations from the previous 'Investor Day' and is not factual." Furthermore, it added, "Through the reply letter, we requested that they be careful not to cause confusion to the company, shareholders, and the market by making or disseminating false claims in the future."

Earlier, FCP announced in a press release last month that it had sent a letter of intent (LOI) to KT&G's board to acquire 100% of the shares of its subsidiary Ginseng Corporation for 1.9 trillion won. In response, KT&G immediately issued a statement saying, "FCP's proposal to acquire Ginseng Corporation was unilaterally disclosed without any discussion with the company," and "We will carefully review the contents of the proposal letter in the future."

KT&G emphasized, "We will do our best to maximize shareholder value through continuous performance creation." The day before, along with the announcement of the third-quarter earnings, it also revealed a value-up (corporate value enhancement) plan. It announced plans to achieve a return on equity (ROE) of 15% by 2027, cash returns, and expanded treasury stock cancellations. Additionally, KT&G's board resolved to use 150 billion won from the funds secured through the securitization of non-core and low-profit assets to purchase 1.35 million shares of treasury stock and cancel them within the year.