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Variables of ISS, NPS Ahead for Merger between Samsung C&T and Cheil Industries
Court Ruling
Variables of ISS, NPS Ahead for Merger between Samsung C&T and Cheil Industries
  • By Jung Suk-yee
  • July 2, 2015, 04:30
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The court has ruled in favor of Samsung C&T, not Elliot Management, in the first trial over its merger with Cheil Industries.

Elliot Management claimed that the merger ratio of 1:0.35 applied to Cheil Industries and Samsung C&T would incur losses for Samsung C&T shareholders in view of asset values. However, the court said the ratio was legitimate because it was calculated in accordance with law. “The value of a corporation is not fixed and its stock price changes from moment to moment, and Elliot Management’s argument is invalid that the merger serves the interest of the owner of the Samsung Group,” it continued.
The court has yet to reach a conclusion regarding the ban on the exercise of voting rights by KCC, which constitutes one of the two injunction applications filed by Elliot Management. Earlier, the KCC had purchased 8.99 million treasury shares of Samsung C&T, equivalent to 5.76 percent of the total.

With Samsung standing on the winning side in the first trial, the decisions of the Institutional Shareholder Services (ISS) and the National Pension Service (NPS) are drawing much attention. The ISS has a great influence on foreign investors’ decision-making in shareholders’ meetings, and thus it is fair to say that the 33.9 percent foreign shares in Samsung C&T depend on the decision of the ISS, which is expected to send its report to parties concerned on July 2 or 3. At present, shares in favor of Samsung C&T stand at 19.78 percent, including those of Samsung Group subsidiaries, group Chairman Lee Kun-hee, and the KCC.

The NPS, which is the largest single entity investing in Samsung C&T with 10.15 ownership, is another variable. Recently, it raised an objection to the merger of SK and SK C&C.