Hedge-fund owner Paul Elliott Singer stepped up his battle with South Korea’s most-powerful business family by appealing for changes at Samsung C&T Corp. and lobbying its investors against a proposed takeover.
Elliott Associates LP wrote to Samsung C&T asking it to use assets to help pay dividends and sent a separate letter to investors recommending they reject the bid from the Lee family’s Cheil Industries Inc. Pension funds in South Korea have bought about 116 billion won ($103 million) of Samsung C&T stock since the billionaire announced a 7.1 percent stake on June 4.
Singer’s moves may make it harder for the Lees to reshape the Samsung Group conglomerate as they prepare for leadership transition to a new generation. Gaining control of Samsung C&T, which holds about $12 billion of shares in other listed chaebol members, would help the family tighten their grip and boost ownership of crown jewel Samsung Electronics Co.
“There is a possibility that the deal may fall apart if Elliott is able to get enough investors to side with it,” Chae Yi Bai, an analyst at the Center for Good Corporate Governance in Seoul, said Monday. “Elliott has triggered a mood among investors, especially the foreign ones, to review the deal again.”
Elliott’s stake makes it the third-largest investor behind South Korea’s National Pension Service and Samsung SDI Co. The fund wrote to both shareholders, along with others, and said Cheil’s offer isn’t in the best interests of shareholders.
Shares of Cheil fell 6.9 percent to 183,500 won in Seoul, and Samsung C&T slumped 7.4 percent, the most in a year.
National Pension Service received the letter from Elliott and hasn’t decided how it will vote on the proposed deal, a spokeswoman, Chi Young Hye, said Monday, declining to give details of the correspondence.
Cheil’s offer for Samsung C&T provides an unfair stock ratio and should be opposed, Elliott said in the letter, according to an e-mailed statement from Samsung SDI.
Pension funds in South Korea bought Samsung C&T shares between June 4 and June 8, according to data from Koscom Corp., which didn’t specify the funds.
Cheil, with interests spanning construction and a theme park, is offering 0.35 share for each Samsung C&T share, the companies said last month. The deal is valued at about $8.9 billion at Monday’s closing prices.