Strange bedfellows fight against Samsung merger

    samsung

    In its fight to stop the merger of two Samsung Group subsidiaries, Elliot Associates just found an unlikely ally.

    In a country that values family-owned conglomerates and is known to be hostile to foreign capital, small Korean investors who have shares in Samsung C&T Corp are siding up with the New York-based activist hedge fund, according to Reuters. Some of them even wants Elliott to become their proxy at a shareholders meeting to vote on the deal scheduled for next month.

    Last Tuesday, Elliott sought for a court injunction to stop Cheil Industries, the group’s de facto holding company, from taking over Samsung C&T through an $8 billion all-shares offer. Elliott has opposed the deal since it would be unfair to Samsung C&T shareholders.

    If the deal pushes through, the two firms would be merged and their stakes in other Samsung Group affiliates including Samsung Electronics, the world’s biggest smartphone maker, would be consolidated into a single entity controlled by Jay Y. Lee, and his sisters, according to media reports. This would make the younger Lee’s ascension to power in the conglomerate smoother.

    The younger Lee is reportedly the successor to his father, Samsung Group chairman Lee Kun-hee, who suffered a heart attack in May last year.

    Now, Samsung C&T’s small shareholders have gathered in an online forum hosted by Naver, the country’s top web portal, to protest Cheil Industries’ planned takeover. They want more for their shares.

    Reuters noted a change in attitude in Korea, where family-owned conglomerates are viewed as “pillars of the country’s economy.” It noted that “simply appealing to a sense of patriotism” for a deal to be successful no longer works.

    Photo credit: Jamie McCall via Flickr