Elliott 'firmly' believes Samsung merger plan unfair

U.S. hedge fund Elliott Management said Friday it still "firmly" believes a planned merger between two key Samsung Group units is not in the best interests of shareholders, continuing its tense war of nerves ahead of a crucial shareholder meeting next month.
  

Samsung C&T shareholders are scheduled to meet on July 17 to vote on the firm's proposed merger with Cheil Industries Co., the de facto holding company of South Korea's top family-controlled conglomerate. Strongly opposing the move, Elliott has requested a local court to stop it.
  

"Elliott continues to firmly believe that the proposed takeover has no place in any restructuring of the Samsung Group, which complies with applicable corporate governance standards and therefore properly recognizes the value attributable to Samsung C&T's shareholders," Elliott said in a brief press release.
  

The proposed merger is widely seen as aiming to pave the way for the transfer of power from hospitalized tycoon Lee Kun-hee, South Korea's richest man, to his only son Jay-yong.
  

The merger plan has sparked a fierce debate between the pros and cons. Some claim Samsung's move only benefits the group's owner family, while others insist that Elliott is abusing its rights as a shareholder.
  

In an apparent bid to gird for a showdown at the shareholder meeting, Samsung C&T has offloaded 5.76 percent of treasury shares to ally KCC Corp., which Elliott claims is illegitimate.
  

Elliott has applied for a court injunction to stop Samsung's move to merge two units, citing the merger ratio of 0.35 Cheil Industries share for one Samsung C&T share is not a fair calculation.
  

In a separate statement posted on its website Friday, Elliott argued the move is "fatally flawed as it ignored the real underlying value of Samsung C&T's businesses and assets."
  

"This entire misses the point ... it is critically important that directors do not approve any takeover transaction at a time when the applicable merger ratio would not be in the interest of Samsung C&T shareholders," it added.
  

Samsung instantly responded to Elliot's latest claim, saying, "We do not feel the need to react to every single reckless casting of suspicions and chasing of public sentiment of overseas hedge funds."
  

"Elliott's remarks are nothing new, and Samsung C&T has been explaining the grounds of the merger based on objective data," it added.
  

On Thursday, Samsung C&T asked its shareholders to delegate their voting rights to the company, a day after the hedge fund made the same request.
  

Samsung C&T said the proxy solicitation is necessary to "ensure a smooth shareholder meeting and meet the quorum," also adding that the merger ratio is "legitimate according to the local law." (Yonhap)