US hedge fund sells back Samsung C&T shares

SEOUL - US hedge fund Elliott Associates said Thursday it had asked Samsung C&T to buy back part of its stake in the South Korean construction firm, after failing to block its merger with another Samsung affiliate.

All Samsung C&T shareholders who opposed the company's takeover by the Samsung Group's de facto holding company, Cheil Industries, were given the right to sell back any shares held before the merger was first announced in May.

A press statement by the hedge fund, which had spearheaded an ultimately unsuccessful investor revolt against the deal, said the decision to sell was "consistent with Elliott's view that the proposed takeover is unfair and unlawful." The statement did not specify how many shares Elliott was selling back.

The activist fund's stake in Samsung C&T was below the 5.0 per cent disclosure level at the time the merger was announced, but grew to 7.1 per cent afterwards.

Thursday was the last day on which shareholders could exercise the buy-back option at an agreed price of 57,234 won per share.

The construction firm's stock closed trading Thursday down 3.5 per cent at 55,200 won.

Samsung C&T shareholders approved the merger with Cheil Industries on July 17 following one of the most bitterly contested proxy battles in South Korean corporate history.

The takeover was seen as a crucial step for the Samsung Group's founding Lee family as it seeks to restructure the multi-headed corporation ahead of a generational transfer of power from ailing patriarch Lee Kun-Hee.

Elliott had argued that the takeover wilfully undervalued the C&T share price, at an unacceptable cost to its shareholders.