South Korea court to rule on U.S. fund's bid to block Samsung deal by July 1

Fri Jun 19, 2015 2:18am EDT
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By Se Young Lee and Sohee Kim

SEOUL (Reuters) - A South Korean court on Friday said it will rule by July 1 on U.S. hedge fund Elliott's injunction request to block a Samsung C&T Corp 000830.KS shareholder vote on an $8 billion takeover bid from Cheil Industries Inc (028260.KS: Quote).

In an unusual example of shareholder activism in South Korea, the fund told the court Cheil's all-stock offer was designed to pave the way for a leadership succession in the family-run Samsung conglomerate and did not serve the best interests of other shareholders.

"The company has yet to present a convincing argument on what synergies can come from the merger," a lawyer for Elliott argued.

Investors and analysts say a Cheil-C&T merger would consolidate stakes in key firms like smartphone maker Samsung Electronics Co Ltd (005930.KS: Quote) into a company controlled by the founding Lee family heirs.

Cheil is Samsung Group's de facto holding company.

Successional planning at South Korea's biggest and most powerful family-run conglomerate has gathered momentum since patriarch Lee Kun-hee suffered a heart attack in May last year.

While the elder Lee remains hospitalized, heirs including his son and likely successor Jay Y. Lee have assumed greater responsibility and overseen a series of restructuring maneuvers setting the stage for a handover of power.

Lawyers for construction firm Samsung C&T argued the merger ratio met South Korean regulations and the U.S. fund - currently Samsung C&T's third-largest shareholder - had no legal grounds to block the deal.   Continued...

A man tours a showroom of Samsung Electronics Co. in Seoul, South Korea, in this January 23, 2014 file photo. REUTERS/Kim Hong-Ji/Files