Samsung beats US hedge fund in key merger vote

69.53 percent of Samsung C&T shareholders voted in favour of a buyout from its de facto holding company, Cheil Industries, despite opposition from U.S. hedge fund, Elliott Associates.
Written by Cho Mu-Hyun, Contributing Writer

Samsung Group, South Korea's largest conglomerate, has defeated billionaire investor-activist Paul Elliott Singer in a key merger vote that ended one of the largest corporate battles in the country.

On Friday, shareholders of Samsung C&T voted in favour of accepting a buyout offer from group affiliate Cheil Industries, the de facto holding company of the conglomerate.

Elliott Associates -- owned by Singer -- waged a public campaign opposing the deal when it was announced back in May on the grounds that the offer was unfavourable to local individual investors of Samsung C&T.

The merged firm, which will be named Samsung C&T, will be inaugurated on September 1 2015. It will become the de facto holding company of Samsung Group, known mostly for its crown jewel, Samsung Electronics, and reinforce control of the sprawling conglomerate by the founding Lee family and its heir apparent Lee Jae-yong.

A total of 69.53 percent of shareholders, or 92.02 million shares out of 132.35 million shares, voted in favour of Cheil Industries' all-stock offer at the meeting -- which was held in Seoul on Friday. Samsung needed at least 55.71 percent of shareholders -- out of the total 83.57 percent that attended the meeting -- to vote in favour of the buyout deal.

Prior to the vote, the National Pension Service, which holds 11.21 percent of Samsung C&T shares, reportedly decided to vote for the merger. The news likely swayed many local individual investors who rarely vote against major corporate decisions in South Korea to vote for the deal.

Elliott Associates, which holds a 7.12 percent stake of Samsung C&T waged a bitter 52 day fight to win over the public. Elliott Associates opened a Korean website and posted its stances on major decisions, while Samsung C&T CEO Choi Chi-hun and executives went to Hong Kong to convince foreign investors to vote for the deal.

Prior to the vote, the hedge fund had filed several unsuccessful lawsuits to stop the vote from going ahead.

Cheil Industries runs an amusement park and fashion business, while Samsung C&T's main business is construction and trade. Samsung C&T has significant prestige among Samsung affiliates, as it was founded in 1938 and is the founding firm of the entire group.

In November last year, Samsung Group announced its intention to sell its defence and military affiliates for almost $2 billion to compatriot Hanwha, a financial and defence conglomerate, as part of its group-wide restructuring plan to streamline businesses.

Source: ZDNet.co.kr

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