By Park Chan-Kyong
South Korea’s dominant Samsung conglomerate — run by the country’s wealthiest family — secured shareholder approval Friday for the crucial merger of two affiliates, seeing off a formidable challenge from investor activists led by a combative US hedge fund.
The victory, following a bitterly contested proxy battle, will come as an enormous relief to the Samsung Group’s founding Lee family as it seeks to restructure the multi-headed corporation ahead of a generational transfer of power from ailing patriarch Lee Kun-Hee.
At a sometimes fractious emergency meeting on Friday, shareholders of construction firm Samsung C&T voted in favour of a takeover by the group’s de facto holding company, Cheil Industries, in an all-stock deal.
The merger had been passionately opposed by a significant number of C&T investors, rallied by US hedge fund Elliott Associates — the company’s second-largest single shareholder.
Elliott had argued that the takeover wilfully undervalued the C&T share price, at an unacceptable cost to its shareholders.
Samsung C&T executives insisted the deal made good business sense and would enhance shareholder value in the long-run, with a more competitive merged company that could target sales of 60 trillion won ($52 billion) by 2020.
“I am grateful for the shareholders who voted for the merger,” C&T chief executive Choi Chi-Hun told reporters.
“We will do our utmost to ensure their support is repaid in the form of heightened shareholder value,” he said.
Turnout was high, with 83.6 percent of eligible C&T voting shares cast.
That left Samsung requiring 55.7 percent of the vote to secure the necessary two-thirds majority, and the finally tally in favour of the merger was 69.5 percent.
For Samsung, victory was critical to its current strategy of streamlining and consolidating its group holdings into fewer, larger companies.
The family already controls Cheil and taking over C&T will solidify its grip on the entire conglomerate because the affiliate holds more than $10 billion in shares of Samsung Group units.
Nationalist voices in the South Korean media had sought to portray the proxy battle as corporate Korea’s fight against pernicious outside influence, with some commentaries straying into far-right territory with remarks about ruthless Jewish financiers.
The remarks forced Samsung to issue a statement, condemning anti-Semitism “in all its forms”.
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