Samsung fended off the challenge of a big activist investor on Friday as the founding family tightened its grip over the sprawling South Korean conglomerate.
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The victory follows a bitterly contested proxy battle and will come as an enormous relief to the founding Lee family. The merger is certain to help the Lee family exert more influence over Samsung Electronics and is seen as a necessary step as the conglomerate prepares to make a generational change from the now-hospitalized Lee Kun-hee to his 47-year old son, Jay Y. Lee.
SEOUL – A bitter dispute over the proposed merger of two Samsung affiliates comes to a head on Friday with a shareholder vote that could – whatever the result – force a shift in corporate governance practice among South Korea’s giant, family-run conglomerates.
United States hedge fund Elliott Associates – which owns just over 7% of the firm – said the sale was too favourable to Cheil Industries and tried to block it in the South Korean courts. In the days leading up to the vote, Samsung C&T took out television and front-page newspaper ads asking shareholders to vote for the takeover.
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Elliott is disappointed that the takeover appears to have been approved against the wishes of so many independent shareholders and reserves all options at its disposal”,
a company spokesman said. Nor apparently had anyone convinced him that Samsung would surely round up the shareholder votes to get what it wanted. Goldman Sachs has also advised Wing Hang Bank and Bank of East Asia on their recent fights against Elliott.
He added that the sovereign wealth fund has shares in other Samsung-affiliated companies and that the value of those shares might have been adversely affected if the merger hadn’t gone through.
The Samsung C&T shareholder meeting was very loud and contentious throughout.
The takeover will be put to a shareholder vote today.
The chaebol is a collection of 67 companies generating more than $250 billion in annual revenue, and traces its roots to C&T, which was the first company the group established in 1938.
Samsung C&T and Cheil said they will live up to their promises of enhanced corporate governance.
Meanwhile, South Korea’s National Pension Service, who holds the largest stake in Samsung C&T at 9.9 percent, said that it supported the takeover. The Samsung C&T stockholders who are opposed to the merger have until August 6 to ask the company to buy back their stocks. “We will do our utmost to ensure their support is repaid in the form of heightened shareholder value”. The cartoons, which reportedly didn’t mention Singer specifically but featured a caricature under the title “Vulture Man”, have since been removed, while the Samsung Group has officially denied any claims of anti-semitism in a statement.
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According to the IDC, Samsung’s market share in China in terms of shipments fell from 20 percent at the start of 2014 to 8 percent during the fourth quarter, as the South Korean smartphone titan’s premium brand strategy lost out to the cheaper models and more localized marketing offered by Chinese rivals.
