KT&G on Monday rejected a $10bn hostile takeover bid led by Carl Icahn, increasing tension with the US financier over management control of South Korea’s largest tobacco and ginseng company.

The move has been widely expected as the management has vigorously defended its running of the company, saying its strategies will add value in the longer term. The hostile nature of the bid is also facing public opposition in South Korea, where foreign buy-out funds have been accused of making tax-free profits at the expense of Korea’s economic interest.