Hedge fund, Samsung Group locked in fight over $8 billion merger
Reuters
Published Jun 11, 2015 03:39
Hedge fund, Samsung Group locked in fight over $8 billion merger
By Se Young Lee
SEOUL (Reuters) - U.S. activist hedge fund Elliott filed another injunction to block a proposed $8 billion (7 billion pounds) merger of two key Samsung (LONDON:0593xq) Group companies, escalating a conflict over a deal seen key to leadership transfer at South Korea's top conglomerate.
Elliott said it had filed its second injunction with a South Korean court, this time to stop builder Samsung C&T Corp (KS:000830) from selling treasury shares amounting to a 5.8 percent stake to KCC Corp (KS:002380) in a bid to gain KCC's support for the proposed all-share takeover offer from Cheil Industries Inc (KS:028260).
In a statement, Samsung C&T said the sale would defend shareholders against "an attack from a foreign hedge fund intended for a short-term trading profit".
Both Samsung C&T and Cheil are Samsung Group affiliates and the merger would allow the conglomerate's controlling Lee family to consolidate its holdings and pave the way for an eventual power transfer since patriarch Lee Kun-hee, 73, fell ill a year ago. He remains hospitalised.
The U.S. fund, which last week emerged as the third largest shareholder in the construction firm, believes the merger undervalues Samsung C&T and is already challenging the deal in court.
Such investor activism is rare in South Korea and could galvanise more opposition to the deal from smaller shareholders, analysts say. Several other big investors have also criticised Cheil's proposal as a low-ball offer.
"Elliott has nothing to lose and this is do-or-die for Samsung... so Samsung needs to offer proper valuations for the deal," said Park Ju-gun, head of corporate analysis firm CEO Score.
KCC told Reuters they were checking the details of Elliott's injunction request and declined to comment further.
Samsung C&T shares were down 5.7 percent as of 0203 GMT, underperforming a 0.5 percent rise for the broader market (KS11).
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.