Following failed Samsung proxy fight leading to huge corruption probe, activist investor Elliott wants $770m in damages.
Elliott Management Corp is to seek compensation for over $770 million in damages from South Korea, following the intervention by authorities in the merger of Samsung C&T Corp. and Cheil Industries Inc in 2015. The New York-based hedge fund said in a statement it had submitted the dispute for arbitration and urged the government to pay the damages in order to preserve its reputation with international investors. According to Elliott, the parties have been unable to resolve the matter on their own. It says that ‘like all prominent economies, Korea obviously has no interest in being viewed as hostile to foreign investors, particularly when other economies in the Asia-Pacific region are fast becoming potentially attractive alternatives.’ The South Korean government acknowledged it has received notice.
Elliott lost a proxy fight to oppose the combination of the Samsung units, solidifying the founding family’s grip over the group. Samsung narrowly won the vote, receiving support from the government-run National Pension Service (NPS). Elliott claims the government unfairly meddled in the deal, which led to a corruption scandal in the country which led to the then government minister in charge of the pension fund landing in jail.
Elliott claims it incurred significant damages as a result of the interference, stating ‘it is regrettable that the former administration took a hostile approach to foreign investment rather than embracing it with a view to promoting domestic innovation and maintaining economic growth,’ adding ‘maintaining credibility internationally among investors is critical to attracting foreign investment and propelling Korea to even greater prosperity.’ This is the second spat Elliott has had in South Korea. In May, Hyundai Motor Group came under pressure from the shareholder activist and shelved its $8.8 billion restructuring plan.