Samsung gauges foreign investors’ decisions on merger proposal

Samsung C&T is thoroughly gauging the decisions of foreign investors, most of whom finished their absentee voting last week on the company’s planned merger with Cheil Industries, the de facto holding company of Samsung Group.

With the voting results to be revealed at a shareholders meeting Friday, their decisions are expected to play a key role in determining the crucial 8.9 trillion won ($7.93 billion) merger for the nation’s largest conglomerate’s management transfer to a new generation.

Foreign shareholders own a combined 26.41 percent of shares in the builder, excluding a 7.12 percent stake owned by Elliott Associates, the U.S. hedge fund that has launched an aggressive campaign to block the deal.

Next to Elliott, BlackRock, the U.S. asset manager, is the most influential shareholder with a 3.12 percent stake, while U.S. hedge fund Mason Capital, with a 2.18 percent stake, has already joined Elliott in opposing the deal.

Most U.S. and European investors are expected to vote down the deal, considering two major institutional advisory firms recommended opposing it based on the unfavorable merger ratio. But industry watchers are paying keen attention to the 5.29 percent of shares owned by Asian investors.

According to industry data, GIC Private, Singapore’s sovereign wealth fund, has a 1.47 percent stake, followed by the Saudi Arabian Monetary Agency with a 1.11 percent and the Abu Dhabi Investment Authority holding 1.02 percent.

The People’s Bank of China and Japan’s pension fund own about 0.8 percent and 0.5 percent, respectively.

“Some foreign shareholders who own shares in Cheil Industries are likely to support the deal,” said an industry source. “Samsung’s recent announcement on a more shareholder-friendly policy may have also positively affected Asian investors, many of whom are long-term investors.”

Amid an escalating proxy battle ahead of the shareholder vote, Samsung is said to have secured support for the merger from 42 percent of shareholders, including its affiliates and the 11.21 percent voting rights of the National Pension Fund, the largest shareholder.

In order for the deal to be approved, Samsung needs to secure a combined 47 percent of shares in its favor, while Elliott can veto it if 23 percent of the votes are against the merger.

By Lee Ji-yoon (jylee@heraldcorp.com)