SEOUL, South Korea (AP) – A South Korean court Wednesday denied an American hedge fund’s request to stop Samsung from combining two of its companies, a largely expected ruling that gives South Korea’s biggest business group a boost in an upcoming shareholder vote on the merger.
The Seoul Central District Court said the proposed takeover of Samsung C&T by Cheil Industries is legal and fair, clearing ways for Samsung to put the merger to a shareholder vote on July 17.
Samsung said in May Cheil will take over Samsung C&T because construction and trading businesses needed new revenue sources, while Cheil, which operates businesses in fashion, catering and resort parks, needed to enter global markets through C&T.
Elliott, Samsung C&T’s third-largest shareholder, filed injunction requests shortly after the deal was announced. It said the proposed deal significantly undervalues C&T while benefiting Samsung founding family members who own a 42-percent stake at Cheil, at the expense of shareholders.
A three-judge panel at the Seoul court didn’t accept the argument. Chief judge Kim Yong-dae said there was no evidence to conclude the deal would serve the founding family only, citing that C&T stocks were higher after the deal was announced.