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US hedge fund steps up campaign against US$8b Samsung asset shake-up

People enter the Samsung C&T Corp. headquarters building in Seoul, South Korea, on June 12, 2015.

[SEOUL] US hedge fund Elliott ramped up its campaign against a proposed US$8 billion merger of two Samsung Group firms, creating a website to lay out its case and saying it wants corporate governance improvements rather than an unfair deal.

In a rare case of shareholder activism in South Korea, the fund has filed two injunction requests to block the merger. The deal is a key step in Samsung Group's ongoing efforts to ensure a stable leadership transfer for the founding Lee family.

The new website, launched a day before the first court hearing on the injuctions, included a 27-page presentation detailing its arguments on why shareholders in construction firm Samsung C&T Corp should not accept the US$8 billion all-stock takeover offer from sister company Cheil Industries Inc. "Elliott's moves show an understanding of South Korea," said Kim Sang-jo, an economics professor at Hansung University, adding that the fund was trying to signal an intent to be a long-term investor instead of one seeking a quick profit. "They are trying to show that they have a strategy that could benefit not only Samsung C&T shareholders but also investors in other Samsung companies." Elliott, the third-largest shareholder in C&T with a 7.1 per cent stake, said in a statement on Thursday that it is supportive of the conglomerate's restructuring needs but said the conglomerate should "properly recognise" Samsung C&T's value.

Samsung C&T said in a statement that Elliott appeared to be repeating its arguments to date and that it would move forward with the merger to maximise shareholder value.

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