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Elliott Management, the activist hedge fund run by Paul E Singer, is taking on the Samsung Group in South Korea.
On Thursday, Elliott announced that it had acquired a stake of 7 per cent in Samsung C&T, a construction and industrial investment company that is currently the target of a takeover bid by Cheil Industries, another South Korean company that effectively serves as the Samsung Group's main holding company for its sprawling network of businesses.
Elliott, which has $26 billion in assets under management, said in a statement on Thursday that Cheil's all-shares takeover offer "significantly undervalues Samsung C&T and that the terms are neither fair to nor in the best interests of Samsung C&T's shareholders."
In a separate regulatory filing in Seoul, Elliott said it had bought the shares "for the purpose of participating in management" of the company.
Cheil announced an $8 billion buyout bid last month for Samsung C&T, which holds a significant stake in the Samsung Group's flagship subsidiary, Samsung Electronics.
The Samsung Group involves a complex network of dozens of companies, and analysts described Cheil's offer as an important step in an ongoing process designed to cement the position of the group's heir-apparent, Jay Y Lee, who is vice chairman of Samsung Electronics. Lee's father and the patriarch of the Samsung Group, Lee Kun-hee, has been ailing since he was hospitalised last May after a heart attack.
Elliott's move suggests that Cheil's bid for Samsung C&T will not go unchallenged. It is a rare glimpse of investor activism in a region where such campaigns are seldom seen and have met with mixed results in the past. The biggest companies in Asian markets where foreign investors are most active - Japan, South Korea, Hong Kong and Singapore - are also often family controlled, meaning outsiders have a harder time influencing management decisions.
Last year, Elliot had built up a small stake in the Bank of East Asia, one of Hong Kong's biggest local banks, which is controlled by the family of David Li. But its stake was diluted after the bank sold new shares to Sumitomo Mitsui Financial Group of Japan. Elliott sought to challenge the decision, which some analysts described as a defensive move by the Li family, and that matter is working its way through the courts in Hong Kong.
Other activist hedge funds have met with challenges in Asia. Two years ago, Third Point, the American hedge fund run by the billionaire Daniel S Loeb, built a substantial stake in Sony and began pressing the company for a board seat and calling on it to spin off part of its entertainment arm, which includes a Hollywood film studio and a music label.
Loeb was largely rebuffed and eventually sold his Sony stake. More recently, he has found his new investment in Fanuc, the Japanese robot maker, better received. After he had a recent meeting with the company's management, Fanuc agreed to double its dividend payout.
"Nobody thought this could be done," Loeb told the audience at an investment conference last month.
Elliott bought about 11.1 million shares of Samsung C&T on the open market at 63,500 won, or $57, apiece, it said in a regulatory filing in Seoul. The shares rose early Thursday on news of Elliott's investment, giving the hedge fund's stake a value of roughly $700 million.
©2015 The New York Times News Service
