The Seoul High Court rejected the appeal of Elliott Associates to block the proposed merger of Samsung C&T with Cheil Industries on Thursday.

The activist hedge fund opposed the transaction citing the reason that it was “unfair, unlawful and significantly damaging to the interests of Samsung C&T shareholders. Elliott Associates is the third largest shareholder of Samsung C&T with 7.1% stake in the company.

The Court also dismissed the activist hedge fund’s appeal regarding its injunction request to invalidate the voting rights of KCC Corporation, which increased its stake in Samsung C&T by acquiring its treasury common shares.

Elliott Associates said the sale of Samsung C&T’s common treasury shares was “deeply alarming” and “intentionally diluted the voting rights and the value attributable to shareholders.

The Seoul Central District Court rejected the two injunction requests of Elliott Associates earlier this month.

Samsung C&T Elliott

Court’s explanation for dismissing Elliott Associates’ appeal

In its ruling, the Seoul High Court explained that it rejected the appeal of Elliott Associates because the merger ratio of 1:0.35 for Samsung C&T and Cheil Industries complied with the existing law.

According to the Court, it does not see such calculation as an irrational decision on the part of the management of the company.

On the other hand, the Court decided to dismiss Elliott Associates’ appeal to block KCC Corporation’s voting rights because of time constraints. KCC will no longer have time to make an appeal and redeem its voting rights because the shareholder meeting is only a day away.

The Court’s ruling cleared the obstacle to the scheduled meeting of shareholders to vote on the proposed merger on Friday. Cheil Industries offered to acquire Samsung C&T for 8.9 trillion won or $7.76 billion in an all-stock transaction.

Samsung C&T said the Court’s decision was a “further confirmation” that the proposed merger is in the best interest of its shareholders.

Elliott Associates unlikely to bring its case to the Supreme Court

Market observers suggested that it was unlikely for Elliott Associates to bring its case to the Supreme Court because of the timing of the ruling. However, they believed that there is a great possibility for the activist hedge fund to develop a new case to nullify the proposed merger if it obtains approval from shareholders.