NewSamsung's Cheil pledges higher returns if merger approved
Samsung company pledges to increase dividend payout ratio to 30pc ahead of July 17 merger vote
Locked in a battle with an activist US hedge fund, Samsung Group's de facto holding company sought to win support for a proposed US$8 billion merger with a sister firm by pledging to bolster post-deal shareholder returns.
Cheil Industries said on Tuesday that the company formed on completion of its all-stock takeover of Samsung C&T Corp would gradually increase its dividend payout ratio to 30 per cent by 2020 from the equivalent of 21 per cent in 2014 and also consider future share buybacks.
On a forecast 2020 pre-tax profit of 4 trillion won (HK$27 billion), the dividends would amount to 4,800 won per share, Cheil said in a statement. It also promised a governance committee within the board of directors to guard investor interests.
"The steps show that the companies are mindful of shareholder value, but we need to take a closer look at the details and whether the growth strategy set forth is reasonable," said Baik Jae-yer, fund manager at Korea Investment Trust Management, a Samsung C&T investor.
The investment firm has yet to decide how it will vote at a July 17 shareholders' meeting, he said.
A deal would smoothen a leadership transfer for Samsung's founding Lee family by helping to consolidate stakes in key companies including Samsung Electronics Co into a vehicle firmly controlled by the Lee heirs.