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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 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.
Elliott is also seeking an injunction against Samsung C&T's sale
of treasury shares to ally KCC Corp <002380.KS>, something that
C&T says will help defend itself and shareholders against the
hedge fund's attack.
The Seoul Central District Court said it would try to rule on
both injunctions by July 1.
Yonsei University law professor Shin Hyun-yoon said Elliott's
case looked thin.
"The merger ratio currently proposed is in accordance with the
rules ... and the board of directors have the right to decide
how many treasury shares to sell at what price," Shin said.
The shares were not sold at unreasonably low prices nor to a
party that would act against C&T's interests, he added.
(Reporting by Se Young Lee and Sohee Kim; Editing by Miral Fahmy
and Stephen Coates)
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