The pension fund, which disclosed its vote intention on its website, did not elaborate. While its shareholding may be small, it is yet another black eye for the deal that has attracted the ire of corporate governance advisors and U.S.-based hedge fund Elliott Associates.
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The vote by CPP Investment Board, which had $265 billion in assets at the end of March, is the latest challenge to the Lee family’s plan to merge its de facto holding company Cheil Industries Inc. with its construction-and-trading arm Samsung C&T Corp.
It is not clear what Cheil and Samsung C&T will do should the deal fail. The merger plan requires the approval of two thirds of shareholders who attend the July 17 meeting.
After a Seoul court rejected Elliott’s application for injunctions to block the deal, Institutional Shareholder Services, the influential global proxy advisory body, advised investors to vote against it. Ilsung Pharmaceutical, a local drugmaker with a 2.11 percent stake, earlier signaled it will vote against the plan.
Against such a backdrop, Elliott again sent a letter to shareholders Wednesday, urging them to lend support to its voice.
Elliott turned up the heat ahead of next week’s vote by releasing an open letter to Samsung C&T shareholders today. But opposition from Elliott, C&T’s third-largest shareholder with a 7.1 percent stake, has led to doubts about whether Samsung C&T can muster enough support from shareholders.
Market watchers remained split over the issue. But the NPS is not obliged to follow the body’s recommendation.
A KCC spokeswoman said the court’s ruling on Tuesday recognizes that its purchase of Samsung C&T’s treasury shares was legal.
Elliott slammed Cheil’s recent promise to increase its dividend payout after the merger as “meaningless efforts to appease shareholders”.
Samsung C&T, however, claimed Wednesday that out of 22 South Korean brokerage houses that delivered reports on the propsed merger, 21 agreed that the move will bring more good than harm.
When asked if he believes the state-run pension fund will decide in favor of Samsung C&T, the CEO said, “I believe the NPS will make a wise decision”.
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The merger, meanwhile, is also widely seen as aiming at paving the way for the transfer of power from hospitalized tycoon Lee Kun-hee, South Korea’s richest man, to his only son, Jay-yong.
