By Kim Yoo-chul
Cheil Industries and Samsung C&T said Tuesday that their merger will be carried out as planned.
"I can confirm that there will be no Plan B if the deal fails," Yoon Ju-hwa, Cheil Industries fashion division president told reporters in a hurriedly-arranged investor relations session at a Seoul hotel.
"As the takeover proposal is in accordance with local regulations, Samsung doesn't see any problems with the deal," said Kim Bong-young, president of Cheil Industries resort construction division, adding the company will adopt measures for its shareholders and Samsung C&T investors after the deal is done.
The two Samsung units announced the merger plan last month in what Samsung officials say is a move to speed up the conglomerate's efforts to shift control to Samsung heir and Samsung Electronics Vice Chairman Lee Jae-yong.
But the merger is facing opposition by U.S.-based hedge fund Elliott Associates, which insists that the 1:0.35 share swap ratio between Cheil and Samsung C&T violated the best interests of Samsung C&T shareholders, given the gap in total assets between the two Samsung units.
Elliott asked the Seoul Central District Court to halt a shareholders’ meeting on July 17. The court is set to give its ruling, Wednesday.
In a filing to the Korea Exchange, Cheil said it will boost its dividend payout ratio to 30 percent from the current 21 percent after the deal. "Cheil will buy back shares once the merger is done," it said.
Yoon stressed that Cheil Industries will become the "de-facto holding company" under the control of Lee.
"Based on diversified business portfolios, Cheil will invest more in the healthcare and energy businesses, which the firm has identified as the next cash cows. Profits will be coming," Yoon said.
Kim Shin, president of Samsung C&T, said the construction unit of the conglomerate will benefit once it is controlled by the "de-facto holding company."
Cheil Industries' promise of increased dividends and the establishment of a corporate governance committee appeared to target Elliott's allegations of weak minority shareholder protection at Samsung C&T, which owns 4.1 percent of Samsung Electronics.
The Cheil-C&T plan is backed by local institutional investors, while Elliott is supported by foreign investors.
The National Pension Service (NPS), which holds a 10 percent stake in C&T, plans to side with Samsung, according to company officials.
The shareholder-friendly remarks, together with an announcement of the listing of Samsung's biopharmaceutical company on the NASDAQ, are the latest moves by Samsung to convince shareholders to approve the merger, said one official.