Samsung shareholders have approved a takeover bid on Sunday which offers more control over the conglomerate to the company’s founding family, in spite of a swarm of protests and opposition from minor investors led by a hedge fund owned by American investor Paul Elliott Singer.
Almost 70 percent of Samsung C&T – the South Korean’s conglomerate largest and most important group – shareholders voted in favor of a takeover bid from another Samsung Group company called Cheil Industries, which is owned by the Lee family, which founded and traditionally controlled the group over the decades. The deal needed the approval of at least two thirds (66,7 percent) of shareholders to go through.
The deal was aggressively opposed by the American hedge fund Elliott Associates, who owns the third largest amount of shares in C&T and rallied opposition of minor investors against the move which provides even more control of the group for the Lee family. Lee Jae-Yong, the son of health-troubled Samsung Group chairman Lee-Kun Hee, will now have an important stake in Samsung Electronics, C&T’s most profitable and well-known subsidiary.
The most important part of the deal is the fact that this was accomplished with only $8 billion, the entire worth of the takeover, whereas buying individual shares would have cost Lee figures going into the tens of billions. Elliot Associates has deemed this deal as unfair for minority shareholders, and carried a significant legal campaign spearheaded by founder Paul Elliott Singer, trying to block the deal both by legal means and by convincing minor investors to vote against it.
The stand-off degenerated into a more personal battle between Singer and the Samsung founding family, after several cartoons allegedly depicting the American investor as a corporate extorsionist and making use of his Jewish background were posted on C&T’s website days ahead of the vote. The cartoons, which reportedly didn’t mention Singer specifically but featured a caricature under the title “Vulture Man”, have since been removed, while the Samsung Group has officially denied any claims of anti-semitism in a statement.
Elliott Associates L.P. owns 7.1 percent in C&T shares, and stated that its only intent was to secure a deal which better reflected the interests of minority shareholders, and has tried to stop the vote from happening by launching several lawsuits. However, a Seoul high court rejected the company’s last possible appeal on Thursday, leaving no legal means to block the vote. This has sparked criticism over the South Korean legislation not offering enough protection for minor shareholders and foreign investors in such cases.