Daily Management Review

Family Wins Samsung C&T Merger Vote, Establishes Control Over Samsung Group


07/17/2015




Family Wins Samsung C&T Merger Vote, Establishes Control Over Samsung Group
The effort invested in convincing shareholders of Samsung C&T, the sister company of Samsung engaged in construction business, in favour of a merger with one of the sister concerns of Samsung for $8 billion. However analysts saw this as a move by the family owning the Korean electronics giant to tighten its grip on the group.

On Friday, the family and the family heirs came out victorious after more than two thirds of the shareholders voted in favour of the merger. The merger was opposed by a section of the shareholders who comprised mostly of hedge funding agencies from the US on the grounds that the merger would dilute the share value of the Samsung C&T.  

In the voting 69.53% of the shareholders of Samsung C&T voted in favour of the takeover of Cheil . This voting happened after Cheil shareholders, in a separate meeting, gad voted unanimously for the merger.
The merger was visibly opposed most by Elliott Associates, US based funding agency

After this merger of the two companies of Samsung, the founding family comfortably has established control over the Samsung Group  that has 70 companies in its folds. The de facto chief and the chairman of Samsung Electronics, 47 years old Lee Jae-yong, would come to hold 16.5% of shares in Samsung C&T while his two sisters get another 11%  after Samsung C&T takes over Cheil. In combination the family members hold 42.1%. of the shares. 

The merger also ensures that Samsung C& T would hold 4.1% of shares of Samsung Group’s flagship company, Samsung Electronics. Lee Kun-hee, father of Lee Jae-yong , holds 3.4%  of shares in the flagship company. When all the numbers are put together, it becomes evident that the family has now taken complete control over the entire group. This merger would solidify the control of the family over the multi-billion dollar global group.

Economically, Samsung C&T plays a very important role in South Korea and is expected to be the most important companies of the Samsung Group post merger. The Samsung group accounts for more than 20% of the economy of South Korea.

The Samsung C&T had attached great importance to the voting and the merger of the two sister companies. The group and the heir family had been working with the shareholders for weeks. Emotional advertisements were placed in all the major local dailies in South Korea appealing shareholders to vote in favour of the merger. It also seems that the advertisement blitz had paid off as more than two thirds of the shareholders voted in favour.

There were even mentions for the shareholders to choose between Korean nationalism and foreign funds. The matter was even a topic of discussion in the National Assembly of the country where there were doubts raised about how vulnerable Korea was to the any pressure by foreign investors.

Analysts however wait to see whether, after this epic corporate win, would Lee Jae-yong be able to supremely control Samsung and whether the group would be able to continue to exert the same influence as was seen during the period of Lee Jae’s father.

(Source: www.forbes.com)






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