Hedge fund chal­lenges Sam­sung takeover deal

The China Post - - WORLD BUSINESS - BY YOUKYUNG LEE

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.

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