Samsung C&T CEO to appeal to global investors' group
By Kim Yoo-chul
Choi Chi-hoon Samsung C&T CEO
Samsung C&T will seek support this week from the Institutional Shareholder Service (ISS) in New York for its proposed takeover by Cheil Industries.
“Samsung C&T CEO Choi Chi-hoon will fly to New York to meet ISS members,” an official at Samsung said, Monday. U.S. hedge fund Elliott Associates is trying to thwart the merger, arguing that it is unfair to shareholders.
ISS is a proxy advisory firm for hedge and mutual funds, exerting huge influence on foreign investors.
“Samsung is trying to play all its cards given the significance of the deal. CEO Choi himself is considering holding a briefing session,” the official said. Choi holds a masters degree in business administration from George Washington University and is fluent in English.
The Seoul Central District Court said last week that it will rule by July 1 on Elliot’s injunction request to block a Samsung C&T shareholder vote on the takeover bid by Cheil Industries.
The swap ratio between Samsung C&T and Cheil Industries was set at 0.35:1, which Elliott argues is unfair to C&T shareholders.
ISS is expected to release its report on the proposed C&T-Cheil merger in the first week of July, according to sources.
As the shareholder meeting is set for July 17, Samsung said its future strategy office, a control tower which mainly deals with owner-related issues, has teamed up with C&T and other affected affiliates to defeat Elliott.
Samsung is on track to bring more institutional investors on its side.
Samsung C&T has so far secured 19.8 percent as friendly investors. The National Pension Service (NPS) has yet to decide its position — it holds a 10 percent stake in Samsung C&T. The proposal needs a two-thirds majority to pass.
“Choi’s ISS trip is part of efforts by Samsung to find more friendly investors,” another official said.
If the ISS’s upcoming report opposes Samsung’s plan, then Samsung doesn’t rule out the possibility that foreign investors, which collectively hold 26.7 percent in Samsung C&T, won’t support the proposed takeover.
“Samsung is preparing for a worst case scenario. It needs 47 percent support to close the deal,” said another official.
The company filed a separate lawsuit against Elliott Associates over the hedge fund’s alleged involvement in falsifying documents about an analysis of Samsung C&T and Cheil.
“Samsung C&T filed a request to the Seoul Central District Court asking Elliott Associates to submit original copies of company analysis written by Ernst and Young, a top accounting firm,” Samsung C&T said.
Earlier this year, Elliott paid Ernst and Young for reports on both Samsung C&T and Cheil Industries.
Elliott commissioned the analysis that was written as a reference for retail investors, Samsung said.
"Without permission by Ernst and Young, Elliott twisted details about the report according to its own interests," said the official.
During a hearing last week in the Seoul court, Elliott said the swap ratio between Cheil and Samsung C&T should be changed to 1:1.6, citing analyses by Korea’s top four accounting firms.