South Korea court rejects bid to block Samsung treasury stock sale | Economy

The builder’s statement also pointed out that the ISS overvalued Samsung C&T in its report.

A Seoul court on Tuesday turned down A US hedge fund’s request to stop a friendly shareholder of Samsung C&T Corp. from voting on a proposed merger with another Samsung unit with treasury shares bought from the builder.

The Seoul Central District court had already dismissed an Elliot demand to prevent a July 17 Samsung shareholders’ meeting called to approve the proposed merger. Currently, foreign investors including Elliott have a 33.61 percent stake of Samsung C&T Corporation.

Elliott Associates had gone to court in an attempt to block a shareholder vote on the merger, which is widely seen as part of the preparations within the Samsung Group to transfer power from the ailing patriarch of Samsung’s founding Lee family, Lee Kun-Hee, to his only son Lee Jae-Yong.

“Despite the projection of a 22.6-percent stock plunge in the case of a merger failure, the ISS report recommended Samsung C&T shareholders to vote against the merger plan, saying the prices could rebound in the future without giving reasonable and objective explanations of the upward trend”, the company said in a statement.

There is no reason to believe the share sale only benefits Cheil industries and the Samsung family members, the court said.

Elliott isn’t alone. Investors including APG Groep NV, the world’s second-largest pension fund, and Aberdeen Asset Management Plc have sided with the activist.

Unlike the local court decision, it said the ratio of merger which is 1:0.35 is unfavorable to Samsung’s shareholders.

“We note the court’s decision but maintain our firm view that the deliberate sale of treasury shares, designed exclusively to support a fundamentally unfair deal for Samsung C&T’s shareholders, was wholly improper, not least from a corporate governance perspective”, the company said.

Samsung C&T welcomed the ruling. Two proxy advisory agencies, ISS and Glass Lewis, have also spoken out against the terms of the deal.

Commenting on the latest move of Elliott Associates, Park Ju-gun, head of corporate at CEO Score said the activist hedge fund obtained more advantage over the fate of Samsung C&T and Cheil Industries merger proposal and the restructuring of Samsung Group.

Elliott, Samsung’s third-largest shareholder with a 7.1 percent stake, launched the legal challenge and has reportedly urged other investors in the company to reject the deal.