Stockholders gather today for C&T showdown

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Stockholders gather today for C&T showdown

The shareholders of Samsung C&T will decide the fate of the merger between their holdings and Cheil Industries today, a decision that will have far-reaching implications for the future of Samsung, the country’s largest business group, and for broader corporate issues like shareholder rights and corporate governance in Korea.

The shareholders and their proxies, including the U.S. activist hedge fund Elliott Associates, will gather for an extraordinary general meeting at aT Center in Seocho District, southern Seoul, at 9 a.m. For the highly-contested merger to be approved, Samsung C&T needs two-thirds of the voted shares cast in its favor; the shares voted must be at least a third of the outstanding shares.

Kim Shin, the co-CEO of Samsung C&T, said on Wednesday he expects owners or proxies of more than 65 percent of the company’s shares to attend. Several local media outlets predicted that more than 80 percent of stakeholders would turn up to be part of the drama.

Three agenda items are on the table; one to approve the merger, and the other two are questions raised by Elliott calling for the articles of incorporation to be amended to allow dividend payouts in non-cash assets and for interim dividends.

Attention will focus on the National Pension Service, the single largest shareholder of Samsung C&T. The Korea Economic Daily, a financial newspaper, has reported that the public pension fund opted to vote for the merger after a meeting last week.

Cheil Industries is the de facto holding company of Samsung. It wants to acquire the construction unit, C&T, and is also scheduled to hold its own shareholders’ meeting today. The outcome is almost preordained, though; three children of Chairman Lee Kun-hee have combined holdings of 38.7 percent of Cheil and the senior Lee holds another 3.4 percent.

Battling down to the wire, Samsung and Elliott continued to fight for proxies. A Seoul court denied Elliott’s appeal on Thursday to block the merger between Samsung C&T and Cheil Industries. The hedge fund sought an appeal to the Seoul High Court after the Seoul Central District Court dismissed two injunctions challenging Samsung’s attempt to combine the two Samsung units.

Elliott Associates was unfazed by the ruling and said it would take its case to the Supreme Court.

“We are disappointed with the court’s decision, especially given the significant weight of shareholder opinion against the proposed merger,” the hedge fund said in a statement.

“We continue to believe strongly that the proposed merger is both unlawful and unfair, and have filed an appeal to the Supreme Court.”

During the past week, the two sides appealed to the public as an extension of their efforts to sway shareholders to their side.

Samsung C&T ran ads on TV, popular web portals and newspapers urging shareholders to delegate their votes to the company; Elliott attacked the merger at a CNBC investment conference in New York.

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