Samsung shareholders back US$8b merger
Lee family cements grip, shares fall as shareholders vote to support takeover deal
Samsung Group's founding family scored a narrow win yesterday in a landmark proxy battle, fending off an activist investor opposed to an US$8 billion deal that cements its grip as a new generation prepares to take the reins of South Korea's biggest conglomerate.
At an often-heated shareholder meeting, investors in builder Samsung C&T Corp approved an all-share takeover offer from sister firm Cheil Industries, Samsung's de facto holding company - but only just. With the backing of two-thirds of votes cast needed for success, some 69.53 per cent of shares voted supported the tie-up.
US hedge fund Elliott Associates, with a 7.1 per cent Samsung C&T stake, had led the charge against the deal, saying it undervalued the target. That view was shared by an impassioned group of domestic retail investors, who saw a merger that bolsters the Lee family's control of Samsung Electronics as riding roughshod over minority interests.
"While the deal will boost Samsung's restructuring, Samsung lost the faith of a lot of foreign and minority shareholders," said Kang Dong-oh, a proxy representative for an online forum of minority shareholders against the merger.
Each of the two firms has stakes in key Samsung companies, including flagship tech giant Samsung Electronics. With 73-year-old group patriarch Lee Kun-hee in hospital following a heart attack last year, the C&T-Cheil merger consolidates holdings into one entity firmly under the control of 47-year-old heir-apparent Jay Y. Lee and his two sisters.
Investors and analysts predict the Lees may now attempt to further consolidate control of Samsung Electronics by having it acquire information technology services firm Samsung SDS, or even by splitting Samsung Electronics into an operating company and a holding company through which they can exert control.