The anti-semitic ads may have been pulled, but they got the desired effect.
The Lee family that controls Samsung secured its victory over minority investors led by Paul Singer’s Elliott Associates LP as shareholders in the conglomerate’s construction subsidiary Samsung C&T voted to approve an $8 billion takeover offer from Cheil Industries Inc., a holding company controlled by a son of Samsung chairman Lee Kun-hee.
The vote marks the end to an epic corporate governance battle that has put Korea’s business elite in an uncomfortable spotlight, after the family that has traditionally controlled the chaebol appeared to resort to personal and racial slurs to discredit Singer’s attempts to secure a fair deal for minority shareholders (of whom Elliott was by far the largest).
The merger will ensure that the 4.1% stake in Samsung Electronics Co. (SSNLF) on the books of Samsung C&T, worth over $6.5 billion at current prices) remains under the control of the group’s founding family as Lee senior prepares to pass his holdings on to a younger generation of family members. Lee senior suffered a heart attack last year and has been looking to withdraw from running the family business since.
The deal was approved by a narrow majority, with 69% of eligible votes cast–just over the two-thirds required by Korean law.
Elliott had accumulated a 7.1% stake in Samsung C&T in the hope of forcing a better offer from Cheil, saying last month that the takeover was “unfair, unlawful and significantly damaging to the interests of Samsung C&T’s shareholders.”
Elliott’s attempts to derail the deal, which included lawsuits as well as appeals to independent shareholders, had sparked a furious campaign by Samsung C&T to win over local minority shareholders, going so far as to depict Singer as a “vulture man” and axe-wielding extortionist in cartoons on its website, while blogs supportive of Samsung’s position had run anti-semitic slurs against him. The company said Monday it “denounced” anti-semitism and said it had pulled all advertizing from Media Pen, the blog leading the attacks.
The Wall Street Journal reported that a number of minority shareholders had stood up to protest the move at their extraordinary meeting Friday, jeering Samsung C&T chief executive Choi Chi-hun. One who stormed the podium was ushered away by security guards, the WSJ said.