By Se Young Lee
SEOUL (Reuters) - U.S. activist hedge fund Elliott Associates escalated its battle to block a $8 billion (5.13 billion pounds) merger of two Samsung (LONDON:0593xq) Group firms on Friday, filing an appeal against a South Korean court ruling in a fresh bid to block a key shareholder vote.
Elliott wants shareholders to reject the all-stock takeover bid by Samsung Group de facto holding firm Cheil Industries Inc (KS:028260) for Samsung C&T Corp (KS:000830), saying the offer undervalues the construction company in which it is the third largest shareholder.
In a rare case of investor activism in South Korea, Elliott has taken to the courts to try and block the deal, which analysts say is key to consolidating various stakes in top affiliates of the sprawling family-run Samsung conglomerate ahead of a looming leadership succession.
Elliott which holds a 7.1 percent stake in Samsung C&T, has so far filed for two injunctions in South Korea and urged other C&T investors to vote against the deal. The top individual shareholders in Samsung C&T are South Korea's National Pension Service and Samsung technology firm Samsung SDI Co (KS:006400), with 10.2 percent and 7.4 percent stakes, respectively.
On Wednesday, the Seoul Central District Court denied Elliott's injunction request to block a Samsung C&T shareholders vote on July 17. Elliott on Friday filed to appeal this decision.
"Elliott remains committed to preventing the Proposed Takeover from being consummated," the fund said in a statement.
A Samsung C&T spokesman said the company would take necessary measures to ensure the deal will be completed. It was not clear when the Seoul High Court will issue a ruling on the appeal.
Cheil and Samsung C&T have been lobbying shareholders to support the merger, promising greater post-merger shareholder returns and an improved governance structure to protect investor interests.
Some investors aren't satisfied, however. On Friday, governance consulting firm Navistock filed a proxy solicitation statement to the South Korean exchange on behalf of a group of local retail investors who are opposing the deal.
The retail investors plan to vote against the merger and will vote for Elliott's proposals to allow Samsung C&T to pay dividends in kind at the July 17 meeting, according to the filing.