'Vulture' versus chaebol in Korea

SOMETHING really strange is happening in Korea. A merger plan was announced, the share price of the company immediately rose 15 per cent and shareholders enjoyed profits to the tune of 20 per cent in a month. But minority shareholders contend that the merger is unfair and their rights are seriously infringed. One of them even filed a lawsuit against the company management. The international media is nearly unanimous in reporting the issue as if the management has done something wrong. It is difficult to understand the situation if one only sees the numbers.

One can begin to understand the situation if the names involved are connected to the numbers. One is Elliott Associates, an activist hedge fund - a pioneer of "vulture funds" - and the other is Samsung Group, Korea's largest chaebol, which was in the final stages of leadership succession after its founder Lee Kun-Hee fell into a coma.

The merger in question is that between Cheil Industries (the de facto holding company of the Samsung Group) and Samsung C&T (which has construction and trading businesses.)