Paul Singer Objection
American hedge fund Elliott Management announced on June 4 that it bought 11.125927 million Samsung C&T shares, equivalent to 7.12 percent of the total, at 63,500 won (US$57.16) per share. The total purchase cost amounted to 706.5 billion won (US$636.0 million). Established in 1977, the hedge fund is currently handling US$26 billion in assets.
Elliott Management explained that it purchased the stocks for the purpose of participating in the management of the company. “We believe that the scheduled merger between Cheil Industries and Samsung C&T is against the benefit of Samsung C&T shareholders, because the value of Samsung C&T has been significantly underestimated and the terms of the merger are not fair,” it said.
As of the end of March this year, those friendly to Samsung C&T, including Samsung SDI as the largest shareholder and affiliate, represented just 14.06 percent of the company, while the high shareholding ratios of foreign investors and minority shareholders made it vulnerable to attacks from the outside.
The merger might be canceled if Elliott Management executes the right of first refusal together with institutional and foreign shareholders. Still, some experts point out that such a gathering will not be easy because of the little benefit the shareholders can get after the cancellation of the merger.