Hedge fund challenges Samsung takeover deal
A U.S. hedge fund is challenging a takeover deal between Samsung companies designed to ensure control of the conglomerate passes to the grandson of its founder.
Elliott Associates L.P., a U.S. hedge fund that is the third-largest shareholder in a Samsung group company Samsung C&T, said Tuesday it filed an injunction against the company and its board of directors to stop an “unlawful” takeover deal.
Elliott said the proposed takeover of Samsung C&T by Samsung’s de facto holding company Cheil Industries is unfair to shareholders. Since announcing its acquisition of a 7.12-percent stake in Samsung C&T last week, the hedge fund has stepped up its campaign to stop the proposed takeover, saying the deal “significantly undervalues” C&T, a construction firm.
Samsung announced the takeover deal last month, touting it as a strategic move to create a global lifestyle and biotechnology company.
Investors, however, saw it as a corporate maneuver to give Lee Jae-yong, the Samsung founder’s grandson, influence over the crown jewel of the Samsung empire, Samsung Electronics Co.
Lee is the biggest shareholder in Cheil Industries and Samsung C&T owns a 4.1-stake in Samsung Electronics.
Cheil plans to complete its takeover of C&T, a much bigger company by assets and revenues, by issuing 0.35 new Cheil shares for each C&T share. After the proposed deal, Lee becomes the largest shareholder in the combined entity with a 16.5-percent stake.