S Korea court rules in favour of Samsung subsidiaries merger

SEOUL: A South Korean court on Wednesday ruled in favour of a proposed merger of two Samsung Group subsidiaries, rejecting a US hedge fund´s motion to stop the eight-billion-dollar acquisition.
US hedge fund Elliott had asked for a court injunction to stop Cheil Industries acquiring Samsung C&T Corp through an all-stock deal, a move seen as an effort by Samsung´s founding Lee family to boost control over the conglomerate ahead of a generational power transfer.
"The court rejected the request from Elliott," a court spokesman told AFP.
Elliott had filed two lawsuits, one of which called for a court order to prevent a Samsung shareholders´ meeting on July 17 to approve the proposed merger.
The hedge fund, which holds a 7.12 percent stake in Samsung C&T, said the terms of the proposed takeover by Cheil Industries "significantly undervalue" Samsung C&T shares.
But the Seoul Central District Court said in the ruling: "The merger ratio was calculated in accordance with relevant laws... and cannot be seen as unfair".
The ratio of the merger is 0.35 Cheil Industries shares for each Samsung C&T share.
Elliott also said the merger proposal as presented by Samsung C&T´s management carried with it "very limited evidence of the claimed synergies and benefits".
It argued it was instead aimed at facilitating a father-to-son power transfer of the powerful Samsung Group rather than acting in the interest of shareholders.
The court, however, ruled: "There is no evidence either that the merger is being pursued only for the interest of the Samsung Group´s family members, regardless of other shareholders´ interests".
Cheil Industries, half of whose stock is controlled by the Lee family, has no direct stake in Samsung Electronics, one of the world´s largest IT companies. But its acquisition of Samsung C&T would bring it the construction and trading arm´s 4.1 percent Samsung Electronics stakes.
Elliott expressed disappointment but vowed to continue its efforts to prevent the merger.
"While we are disappointed with the court´s decision, we continue to believe that the proposed merger is neither fair nor in the best interests of Samsung C&T´s shareholders," the hedge fund said in a statement.