US Hedge fund dealt blow as Samsung’s $8bn merger approved – Computer

The merger between the Samsung conglomerate’s Cheil Industries and construction unit Samsung C&T Corp. will give Lee a 16.5% stake in the merged firm, which is planning to keep the Samsung C&T name and relist in Korea on September 15th of this year.

For Samsung’s founding Lee family, the merger is a crucial step in its strategy to consolidate its control of the giant, multi-headed conglomerate, ahead of a generational transfer of power from ailing patriarch Lee Kun-Hee. The merger had been passionately opposed by a significant number of C&T investors, with United States hedge fund Elliott Associates leading the opposition.

Elliott had said that the takeover deliberately underestimated share price of the C&T, at an objectionable value to its shareholders.

The DSME, the world’s third-largest shipbuilder, was estimated to have posted a couple of billion dollars of losses in the second quarter as the shipyard was forced to belatedly book losses from offshore plant orders, which had been dismissed by former executives to gain support from shareholders. Samsung C&T – “construction and trade” – will stand at the head of all companies in a group whose interests range from life insurance to shipbuilding to biotechnology, among numerous other fields.

Turnout for the vote was high, with 83.57 per cent of eligible votes cast.

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.

But two banking sources contacted by FinanceAsia noted that there is now no reason for Elliott to keep its 7.1% shareholding, tipping an exit via a block deal.

New York hedge fund Elliott Management, run by billionaire activist investor Paul Singer, thinks the merger of the two subsidiaries is bad for shareholders, arguing the sweetheart deal to Samsung’s founding family (which owns large stakes in the subsidiaries) doesn’t benefit the rest of its stockholders.

More than 3,000 individual investors have created an online forum aimed at blocking the C&T takeover.

“It highlighted deep-rooted problems in corporate governance by the chaebol“, Hwang said.

The meeting between Prime Minister Hwang Kyo-ahn, Saenuri Party Chairman Kim Moo-sung, and Lee Byung-kee, the chief of staff, will take place next Wednesday, Won Yoo-chul, Saenuri’s newly elected floor leader, said in a meeting with senior party members.

C&T expects Elliot to continue to reflect its disappointment in the merged entity as well in future.

Samsung C&T and Elliott have been embroiled in a proxy fight to win more votes for each other’s claims, wooing shareholders to their sides through heated media campaigns.

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”.