Samsung C&T to Delist Depositary Receipts in UK to Stop Elliott’s Suit

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Samsung C&T, the construction and trading subsidiary of Samsung Group announced its intention to delist its depositary receipts (DRs) traded in the stock market of the United Kingdom.

Samsung C&T said it would submit documents with the Financial Conduct Authority (FCA) in UK to delist its depository receipts as early as next week.

“The DRs are being delisted because trading volume had been marginal since 2013 and also for the sake of convenience in the company’s administrative procedures,” explained Samsung C&T in a statement.

The South Korean construction company also rejected reports that the decision was part of its strategy to block potential lawsuits by its foreign investors.

“The reports that the move was carried out to influence lawsuits by overseas investors in Britain or elsewhere is not true,” said Samsung C&T.

Eliott opposes Samsung C&T merger with Cheil Industries

The South Korean construction company made the decision as part of its strategy to prevent a potential lawsuit from Paul Singer’s Elliott Associates. The activist hedge fund owns 7.1% of Samsung C&T and opposes the company’s planned merger with Cheil Industries.

Elliott Associates filed court injunctions to stop the planned merger and Samsung C&T’s intention sell almost nine million Treasury shares to a local vendor and existing shareholder KCC for KRW 674 billion. The South Korean construction company’s decision to sell its treasury shares is part of its strategy to secure shareholder support for the merger.

Cheil Industries offered to acquire Samsung C&T in an all-stock deal (0.35 Cheil shares for every Samsung C&T share), which was valued at approximately $8.9 billion. Market observers perceived the transaction as an attempt by Samsung Group’s Lee family to tighten its control over different business units particularly Samsung Electronics, the crown jewel.

Elliott Associates claimed that the attempt of Samsung C&T to sell its Treasury shares was unlawful, and the merger undervalues the company significantly.

“Elliott continues to believe that the proposed takeover is clearly neither fair to nor in the best interests of Samsung C&T’s shareholders and that it is unlawful,” according to the activist hedge fund.

Samsung C&T stock performance

The stock price of Samsung C&T closed KRW 68,400.00 per share, down by 1.87% in Korea on Friday. Over the past 52 weeks, the stock traded between KRW 51,200.00 and KRW 80,400.00 per share. The company lost 13% in stock value over the past year.

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