NPS expected to vote for merger of Samsung affiliates
By Kim Yoo-chul
Samsung Group executives expressed optimism Wednesday that they will win support from the National Pension Service (NPS) for the proposed merger of Samsung C&T and Cheil Industries.
They stressed the positive effects the merger would have on the interests of shareholders. The NPS holds the casting vote with 11.6 percent of Samsung C&T’s shares.
Asked whether NPS would vote for the merger at the July 17 shareholders’ meeting, Samsung C&T CEO Kim Shin said, “I’m sure that if the NPS supports Samsung, then the merger will be done.”
He made the remark after a weekly regular meeting with presidents of Samsung affiliates at the Seocho Samsung Tower, southern Seoul.
“Samsung is doing the utmost to gather friendly shareholders,” Kim said. “Domestic institutional investors and some foreign investors are supporting the merger.”
He also pledged to make greater efforts to boost benefits for long-term investors.
Foreign investors hold a combined 33.61 percent stake in the company, while Samsung C&T has secured a friendly 19.78 percent stake.
Kim said the effects of the latest report by Institutional Shareholder Services (ISS) will be limited. It joined another proxy advisory, Glass Lewis, in opposing the deal, backing Elliott Associates’ claim that the 1:0.35 share swap ratio was against the best interests of Samsung C&T shareholders.
Samsung Securities CEO Yoon Yong-am said ISS is losing its credibility because the report was based on inaccurate information.
“The ISS report is drawing criticism that it lacked objectivity and reasonability,” he said. “The accuracy of its report has been called into question. If you closely look at the culture, history and structure of local firms, it’s fair to say reports by local experts are more credible.”
He also said the NPS will “judge well” as it needs to expand its long-term investment returns.
“The NPS’s role in the overall economy is very significant,” Yoon said. “We expect it will make a judgment as a major shareholder of not only Samsung but also most domestic companies.”
Yoon and senior executives at Samsung affiliates have held meetings with foreign investors. Samsung C&T’s co-CEO, Choi Chi-hyn, was on an overseas trip.
Cheil Industries CEO Kim Bong-young also pointed out that the ISS report has some flaws.
Separately, Elliott has urged Samsung C&T shareholders to vote against the merger plan.
“In fact, between April 9 (when Elliott met with Samsung C&T) to the time of the announcement of the proposed merger, the share price-based merger ratio for the proposed takeover had deteriorated by approximately 14 percent for Samsung C&T shareholders,” the U.S. hedge fund said in a letter to investors on its website — www.fairdealforsct.com. “But despite this, the Samsung C&T board still went ahead and announced the proposal.
“Cheil Industries is, in any case, not an obviously good merger partner.”