In $8 billion Samsung bid, some Koreans break ranks to side with foreign activist

Sun Jun 14, 2015 5:11pm EDT
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By Se Young Lee

SEOUL (Reuters) - In a country with a record of hostility toward foreign capital, some local investors are breaking with tradition as they side with a U.S. hedge fund opposing an $8 billion merger seen vital to the transfer of leadership at South Korea's top conglomerate.

Hundreds of Samsung C&T Corp's 000830.KS small stakeholders have converged on a public web forum in recent days to protest what they say is a low-ball all-stock takeover offer from Cheil Industries Inc (028260.KS: Quote), an affiliate of Samsung Group and the conglomerate's de facto holding company.

Heirs of Samsung Group's founding Lee family want the merger to consolidate holdings of key affiliates including Samsung Electronics Co Ltd (005930.KS: Quote) into a company under their control. Opponents say the Lee family should pay a higher price.

The online protest is unusual in a culture where South Korea's big family-controlled conglomerates, or chaebol, are seen as pillars of the country's economy and typically get their way. Simply appealing to a sense of patriotism to get a deal done is no longer acceptable, the protesting investors say.

"This is my retirement money," one investor claiming to own 7,000 Samsung C&T shares said on the forum, hosted by Naver, South Korea's top web portal. "I have to protect my assets."

The exalted position of chaebol in Korean society wobbled last year when a Hyundai Motor Co-led (005380.KS: Quote) group paid 10.6 trillion won ($10 billion) for real estate in Seoul that was more than triple the property's appraised value.

The deal angered shareholders and led several domestic institutional investors to publicly criticize the conglomerate - a rare event in a society that values consensus.

Now, the prospect of what critics say is a bad deal for Samsung C&T shareholders has made some retail investors - known as "ants" in local trading circles for the size of their shareholdings - unusually vocal.   Continued...

Visitors walk past the Samsung stand at the Mobile World Congress in Barcelona February 24, 2014. REUTERS/Gustau Nacarino