Elliott Associates no longer a ‘long-term investor,’ some say

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Elliott Associates no longer a ‘long-term investor,’ some say

Published: 06 Aug. 2015, 21:34

U.S. activist hedge fund Elliott Associates has agreed to sell 4.95 percent of its 7.12 percent stake in Samsung C&T, according to financial sources on Thursday.

The decision came three weeks after shareholders of Samsung’s construction arm approved its takeover by the chemical and fashion affiliate Cheil Industries. The merger is set to be completed on Sept. 1.

Elliott was exercising its appraisal right for the share sale. The right makes it possible for a shareholder to sell back shares owned before any merger is announced under the Korean law.

Elliott’s stake in Samsung C&T will fall to 2.17 percent.

The fund’s move reverses its previous claim it was a “long-term investor” in Samsung when Koreans criticized it for being a speculative investor chasing short-term margins. The company tried to block the disputed merger between the two Samsung affiliates, claiming the merger is based on unfair terms and will only end up bloating the Samsung family’s personal assets. Having failed in its attempt, Elliott appears to be preparing for an exit with the share sale, speculators say.

“Elliott seems to be pulling out of the Korean market after concluding its strategy won’t work in Korea,” said Kang Seung-boo, CEO LK Investment Partners, an expert in corporate governance. “The sale is also meant to secure legitimate ground for potential lawsuits [against Samsung].”