A South Korean court today ruled in favour of the proposed merger of two Samsung Group subsidiaries, rejecting a US hedge fund’s request for a court order to stop the move.
US hedge fund Elliott had asked for a court injunction to stop Cheil Industries acquiring Samsung C&T Corp through an all-stock deal, a move by Samsung’s founding Lee family to boost control over the conglomerate ahead of a generational power transfer. “The court rejected the request from Elliott,” a court spokesman said.
Elliott had filed two lawsuits, one of which called for a court order to prevent a Samsung shareholders’ meeting on July 17 to approve the proposed merger.
The hedge fund, which holds a 7.12 per cent stake in Samsung C&T, says the terms of the proposed takeover by Cheil Industries “significantly undervalue” Samsung C&T shares.
But the Seoul Central District Court said in the ruling, “The merger ratio was calculated in accordance with relevant laws... and cannot be seen as unfair”.
The ratio of the merger is 0.35 Cheil Industries shares for each Samsung C&T share.
Elliott also said the merger proposal as presented by Samsung C&T’s management carried with it “very limited evidence of the claimed synergies and benefits”, arguing it was aimed at facilitating a father-to-son power transfer of the powerful Samsung Group rather than acting in the interest of shareholders.
The court, however, ruled, “There is no evidence either that the merger is being pursued only for the interest of the Samsung Group’s family members, regardless of other shareholders’ interests”.