Reemergence of Samsung C&T Issue
The Seoul High Court ruled on May 31 that the value of the appraisal rights of dissenting shareholders applied during the course of the recent merger between Samsung C&T and Cheil Industries was underestimated. Earlier, the court of the first instance had deemed it appropriate in the suit Ilsung Pharmaceuticals and the like had filed to have the value of the appraisal rights changed. Ilsung Pharmaceuticals represents 2.11% of pre-merger Samsung C&T.
“During the merger process in May last year, the stock price of Samsung C&T failed to reflect the value of the corporation in an objective way, and thus the value of the appraisal rights proposed by Samsung C&T should be raised from 57,234 won to 66,602 won per share,” the Seoul High Court explained, adding, “The sluggish performance of Samsung C&T at that time may be a result of someone’s intention, and the possibility cannot be ruled out that the National Pension Service’s continuous disposal of Samsung C&T shares at that time was not grounded on an appropriate investment decision.”
Under the circumstances, the Samsung Group is embarrassed about the reemergence of the Samsung C&T issue. Although it can still resort to the Supreme Court, the litigation against the merger could be affected if the latest ruling remained valid. Earlier, Samsung applied a ratio of merger of 1:0.35, but the ratio may have to be altered in the event of any change in the value of the appraisal rights.
Post-merger Samsung C&T made its debut in September last year. Since then, Samsung Electronics vice chairman Lee Jae-yong, Hotel Shilla president Lee Bu-jin and Samsung C&T president Lee Seo-hyeon have tightened their grip on the entire group via the post-merger corporation. Samsung C&T covers electronics and finance, the two main pillars of the Samsung Group. The Samsung Electronics vice chairman currently has 17.2% of the shares of the company and each of the two daughters of group chairman Lee Kun-hee has 5.47%.
Samsung C&T had a pretty bumpy road before its establishment. Elliot Management and Ilsung Pharmaceuticals had called the ratio of merger into question and filed the suit in August last year before losing the case in January this year. Elliot Management dropped every case against Samsung C&T two months later but Ilsung Pharmaceuticals pushed ahead and obtained the favorable ruling at the appellate court.