One of the big issues
in Korea is ongoing Samsung Group’s merger of two units: Samsung C&T and
Cheil Industries Inc. Basically, merger is a situation that one company is
absorbed into another company and ceases to exist. The corporation that
continues to operate is called surviving corporation and the other corporation
that ceases to exist is called merged corporation. The surviving company has
all rights, privileges, power, and liabilities of merged corporation.
The reason that this
issue arose is that Elliott Management, which is a hetch fund management company
based on the United States, opposed to Samsung Group’s merger. There are
several issues on the opposition. In this case, Cheil Industries Inc. offer to
buy Samsung C&T.
1.
Elliott’s
campaign, which centers on the idea that Cheil is using ilicit means to low
ball Samsung C&T minority shareholders.
2.
Elliott
against South Korea’s wealthiest family as the dynasty prepares for a
once-in-a-generation leadership transition from hospitalized Samsung patriarch
Lee Kun Hee
3.
The
management teams of Samsung C&T and Cheil Industries have failed to
articulate convincing reasons for shareholders to vote in favor of a merger
between two very different companies
4.
The
deal as an attempt “to hastily railroad Samsung C&T shareholders into an
unfair takeover
These fours issues are mentioned by Elliott Management to
oppose the merger of two units of Samsung. Getting into the deep insight, we
basically have to know the fact that the value of Samsung C&T is significant
undervalued. On the other hand, the value of Cheil Industries is significantly overvalued.
The interesting thing is Cheil Industries Inc. made the proposal in accordance
with pertinent law so the 1:0.35 stock swap ratio will not be changed, and
Elliott is the third biggest shareholders of Samsung C&T. It means that
Cheil Induestries Inc could buy Samsung C&T with much cheaper price, and it
is eventually harmful for Elliott. We don’t know who is going to win, but it is
a fight between two big companies from the U.S and Korea.
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In my marketing class we also talked about Samsung and how it becomes such a powerful company today. Everybody sees Samsung as a threat now and I think it's interesting to see how this would turn out.
ReplyDeleteGoing to be a big fight between the companies
ReplyDeleteHopefully they can work to a successful merger.
ReplyDelete