Elliott’s opposition to the takeover, which has swelled to include small South Korean shareholders and pension funds from Canada and the Netherlands, is an unexpected challenge to the Lee family’s power.
For Samsung’s founding family, the move is a crucial step in consolidating control of the conglomerate, ahead of a generational power shift at Samsung.
The merger between the Samsung conglomerate’s de facto holding company, Cheil Industries Inc., and its construction-and-trading arm Samsung C&T Corp., will help streamline Samsung’s convoluted ownership structure, which consists of about 70 affiliates tied together by a complex web of cross-shareholdings.
The removal of the cartoons attacking Paul Singer, the Jewish founder of New York-based Elliott Associates, came a day before shareholders of Samsung C&T were to vote on the merger, which is opposed by Singer’s fund, the third-largest shareholder in Samsung C&T.
Samsung Group’s Lee family secured the support of 69.53 per cent of the company’s shareholders for the merger at an extraordinary general meeting (EGM).
In a statement, the US fund said, “
Elliott is disappointed that the takeover appears to have been approved against the wishes of so many independent shareholders and reserves all options at its disposal.”
In a proxy battle that has spread to South Korea’s courts and the front pages of its newspapers, Samsung has lined up almost a third of C&T voting shares – or more than three quarters of those held by investors who have publicly declared their intentions.
Elliott sends a letter to Korea’s National Pension Service, asking the agency to vote against the merger at a July 17 shareholder meeting.
Cheil Industries and Samsung C&T announce a plan to merge by the end of August.
The Samsung C&T shareholder meeting was very loud and contentious throughout. If just 3.25% had not voted in favor, the merger would have been rejected.
Construction company Samsung C&T holds a 4.2% stake in Samsung Electronics as well as stakes in other companies such as Samsung SDS. At Samsung Electronics, which has far more foreign shareholders than C&T, the Lees may find it even harder to get their way.
“The narrow results will be shocking for Samsung and will make Samsung realise that they have a lot to do in order to win back investors and the market’s trust”, said Kim Sang Jo, executive director at the Solidarity for Economic Reform and an economics professor at Hansung University in Seoul.
“We will try our best to increase shareholders’ value and act on the plans that we proposed to enhance the rights of shareholders”.
Responding to a demand by the Simon Wiesenthal Center, the subsidiaries at the heart of the debate issued a joint statement in which they asserted that they “condemn anti-Semitism in all its forms”.
According to the IDC, Samsung’s market share in China in terms of shipments fell from 20 percent at the start of 2014 to 8 percent during the fourth quarter, as the South Korean smartphone titan’s premium brand strategy lost out to the cheaper models and more localized marketing offered by Chinese rivals.