Shareholders approve controversial Samsung merger

The family already controls Cheil and taking over C&T would solidify its grip on the entire conglomerate because the affiliate holds more than US$10bil (RM38.09bil) in shares of Samsung Group units.

All eyes on Friday will be on the state-backed National Pension Service (NPS) – the biggest single shareholder in Samsung C&T, with a near-12 per cent stake that could swing the final vote either way.

The merger is strongly opposed by a few of Samsung C&T’s shareholders, led by US hedge fund Elliott Associates.

While receiving praise for attempting to increase transparency and shareholder accountability in South Korea, many observers note that American activist investor tactics may not be enough to crack open South Korea’s famed “chaebol” network of conglomerates. On Monday, Samsung C&T took out an advertisement that ran on the front page of almost every major South Korean daily newspaper and urged support for the deal.

Samsung construction company Samsung C&T said that 69.5 percent of shareholders who voted supported the takeover of it by another Samsung company, Cheil Industries.

The takeover will be put to a shareholder vote today. Inheriting his father’s shares in Samsung Electronics or his stakes in other key Samsung firms that have stakes in the consumer electronics giant would incur heavy inheritance taxes that could exceed $5 billion.

An Elliott spokesman told Reuters: “

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.”

June 9 – Elliott applies for a court injunction to stop the merger plan, claiming the proposed takeover is not in the best interest of Samsung C&T shareholders and is unlawful.

Construction firm Samsung C&T, part of the wider Samsung Group, has approved a controversial buyout deal which will aid the controlling Lee family in their internal power handover.

Partly in response, Elliott bought 1% stakes each in Samsung Fire and Marine and Samsung SDI in an effort to bring additional pressure to bear against the merger.

“There are a lot of people who are just biting the bullet”, he said.

Although both companies have yet to reveal details about their performances in other geographical markets, their weaker-than-expected results are partly linked to their sales in China, the report said.

For Samsung, victory was critical to its current strategy of streamlining and consolidating its group holdings into fewer, larger companies.

Cheil Industries plunged 7.7 percent, and Samsung C&T tumbled 10.4 percent. A considerable number of foreign investors rejected the proposal while domestic public sentiment about the merger was also negative, showing that Samsung has yet to demonstrate the legitimacy of its work to overhaul its control structure.