Samsung C&T shareholders approve Cheil Industries’ takeover offer

Lee family, which is controlling the Samsung conglomerate, has achieved a big victory over Elliot Associates LP when shareholders gave their approval for the $8 billion merger of two affiliates.

But with stockholders at the Samsung C&T meeting expressing their opposition to the merger, which they said was unfavorable to them, it took more than three and a half hours to deal with that single agenda item.

Shares in both C&T and Cheil fell sharply after the vote, dropping 10.4 per cent and 7.7 per cent respectively, as those among investors who had been hoping bid terms might be sweetened exited the stocks.

Elliott, which argued that Cheil’s offer undervalued the company, is expected to remain an irritant for Samsung Group despite today’s vote.

No way was a US hedge fund, for all the logic of its arguments, the skills of its lawyers and the tenacity of its campaign, going to block mighty Samsung from having its way on Samsung’s native turf.

For Samsung’s controlling Lee family, rejection of the deal would remove a smooth option for generational management transfer at the group, whose 73-year-old patriarch Lee Kun-hee remains hospitalised since a heart attack previous year.

In this June 23, 2015, Lee Jae-yong, vice chairman of Samsung Electronics Co., arrives to attend a press conference at the company’s headquarters in Seoul, South Korea. Before he appeared, one shareholder stormed the stage and shouted into the microphone, “I strongly oppose the merger!” before being swiftly ushered away by security guards. That is less than 3 percentage points above the two-thirds majority needed to succeed.

The meeting room for the Samsung C&T shareholders, designed to accommodate around 100 investors, was so densely packed that some had to sit in the aisles and along the backside.

Cheil Industries and Samsung C&T announce a plan to merge by the end of August.

On Tuesday, nearly every South Korean newspaper ran an ad by the Samsung unit on the front page, which came in the form of a statement wooing C&T shareholders to side with Samsung. During the meeting on Friday, stockholders approved the merger with Cheil Industries, the first item on the agenda, with 69.53% votes in favor. The controversy about the merger has also left some major work for South Korea’s National Pension Service, domestic securities firms, and asset managers. “According to a source in the finance industry, Jews have a robust network demonstrating influence in a number of domains”, the South Korean financial publication MoneyToday said last week.

“Foreign investors would not want to take inherent management risk by investing in Korean companies with such poor corporate governance that lead to shareholders’ value being exploited by the founding family members for their own benefit not shareholders”, he said.

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.