November 21, 2024

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[THE INVESTOR] Activist fund Elliott Associates is seeking more than US$670 million in compensation for the loss it claims to have suffered from the 2015 merger of two Samsung units, an official document released by Seoul’s Justice Ministry showed on May 11.   

The ministry disclosed the notice of intent it received from Elliott on April 13, in which the US firm asked the Korean government for a settlement over damages incurred from investment in Samsung C&T following its merger with Cheil Industries.

The fund filed an investor-state dispute settlement against the Korean government “in an amount to be quantified, and currently estimated to be not less than US$670 million, as well as interest, costs and other such relief as a tribunal deems appropriate.”

Elliott, which held about a 7 percent stake in Samsung C&T, opposed the merger citing unfair terms that it said greatly undervalued the company and hurt investors’ interest. It lost a proxy fight to block the deal and the merger went ahead, backed by the state-run National Pension Service’s decisive vote in Samsung’s favor.

The controversial deal was widely seen as a step to enhance the leadership succession at the family-run business empire from ailing patriarch Lee Kun-hee to his son, Samsung Electronics Vice Chairman Lee Jae-yong, after the elder Lee fell into a coma in 2014. 

But it became the center of a massive corruption scandal that led to the ousting of former President Park Geun-hye and arrest of the younger Lee. Park has been sentenced to 24 years over the scandal pending an appeal. Lee also served a jail term before he was set free in February after an appellate court suspended his sentence.

Elliott is expected to take the matter up with the international agency that handles investor-state disputes, if the administration of President Moon Jae-in disagrees to the negotiation within 90 days after the submission of the notice.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)