[Newsmaker] Samsung pushes to win over foreign investors

Samsung C&T, the construction and trading arm of Samsung Group, on Friday unveiled detailed new shareholder-friendly policies, including the establishment of a special committee of six experts that will oversee shareholders’ rights, as part of last-minute efforts to win a vote of shareholders on July 17 over the proposed merger with Cheil Industries. 

The committee will be composed of three outside directors and three experts. One of the three outside directors will be tasked with protecting the interests of shareholders in the $8 billion all-stock takeover offer by Cheil, Samsung’s de facto holding company, the builder said in a press release.

The company added that it would allocate 0.5 percent of its operating profits for social welfare activities, and hold regular meetings with shareholders for better and closer communication.

In a related move, Samsung C&T CEO Choi Chi-hun flew to Hong Kong on Wednesday with other executives to meet foreign shareholders and to clarify their stance on the merger and the Institutional Shareholder Services’ report opposing the deal.

With the battle against U.S. activist hedge fund Elliott Associates, which has sought to block of the deal, intensifying, the nation’s largest business empire’s heir-apparent Lee Jay-yong, vice chairman of Samsung Electronics, also stepped up for the first time in an attempt to make the deal go through this week.

Lee on Wednesday had a meeting with Park Yoo-kyung, an investment adviser at Dutch pension-fund manager APG Asset Management. APG owns a 0.3 percent stake in Samsung C&T.

The event was crucial for Samsung as APG, which has been critical of the proposed merger, plays as a dialogue channel between Samsung and about 30 foreign investors regarding the merger issue.

Market insiders said the moves of Samsung executives are due in part to international proxy advisory firms, including Glass Lewis and Institutional Shareholder Services. The two advisors proposed shareholders of Samsung C&T to veto the proposed merger, claiming that stocks of Samsung C&T were undervalued in the all-stock deal.

Along with foreign shareholders, another to cast its vote for the success of the deal is the National Pension Service, the largest shareholder of Samsung C&T.

The NPS currently holds 11.61 percent of Samsung C&T stocks, controlling 11.2 percent of all votes to be cast.

 Samsung C&T needs at least two-thirds of votes to go its way to proceed with the merger.

The NPS was due to decide Friday evening whether it would vote on the merger or outsource the decision to the Proxy Voting Policy Committee -- an independent committee composed of nine members including government officials, academics and shareholders in the pension fund.

The fund chose the latter for SK Group’s merger plan last month. The committee opposed the deal on the grounds that the deal could hurt shareholder value.

Some industry watchers said if the pension fund decides to outsource its decision, it is highly likely to vote against the merger of the two Samsung units as it has the same deal structure with the SK case.  

On the other hand, U.S. activist hedge fund Elliott on Friday urged the NPS to join it in opposing the merger and calling for an “orderly and fair restructuring of the Samsung Group.”

“We expect that the NPS -- entrusted with the hard-earned capital of ordinary Koreans -- will choose to make the proper financial decision to oppose these wholly unfair takeover proposals,” Elliott said in its latest statement.

By Suk Gee-hyun (monicasuk@heraldcorp.com)