A US hedge fund is challenging a takeover deal between Samsung companies designed to ensure that control of the conglomerate passes to the grandson of its founder.
Elliott Associates LP, a US hedge fund that is the third-largest shareholder in a Samsung group company Samsung C&T Corp, said yesterday that it filed an injunction against the company and its board of directors to stop an “unlawful” takeover deal.
Elliott said the proposed takeover of Samsung C&T by Samsung’s de facto holding company Cheil Industries Inc is unfair to shareholders.
Since announcing its acquisition of a 7.12 percent stake in Samsung C&T last week, the hedge fund has stepped up its campaign to stop the proposed takeover, saying the deal “significantly undervalues” C&T, a construction firm.
Samsung announced the takeover deal last month, touting it as a strategic move to create a global lifestyle and biotechnology company.
However, investors saw it as a corporate maneuver to give Jay Lee, the Samsung founder’s grandson, influence over the crown jewel of the Samsung empire, Samsung Electronics Co.
Lee is the biggest shareholder in Cheil Industries and Samsung C&T owns a 4.1 stake in Samsung Electronics.
Cheil plans to complete its takeover of C&T, which is a much bigger company by assets and revenues, by issuing 0.35 new Cheil shares for each C&T share.
After the proposed deal, Lee would become the largest shareholder in the combined entity with a 16.5 percent stake.
The announcement of the deal raised eyebrows among Samsung critics, but little opposition was expected at a shareholders’ meeting next month to approve the deal until Elliott spoke against the takeover.
C&T’s largest shareholder, the South Korean National Pension Service, which has a 9.79 percent stake, rarely raises corporate governance issues at shareholders’ meetings.
The second-largest shareholder is another Samsung affiliated company, Samsung SDI Co.
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