Seoul rejects Elliott’s $20 mn claim against Samsung C&T

Elliott Investment Management Corp. has lost a case against Samsung C&T Corp. in seeking 26.7 billion won ($20.2 million) in compensation with connection with the latter's merger with Cheil Industries Corp. in 2015.

The Seoul Central District Court on Friday rejected Elliott’s claim that Samsung C&T owed it 26.7 billion won, the difference between the prices Samsung had paid to the US activist fund and to other shareholders opposing the two Samsung arms' combination to buy back their shares.

In 2015, Elliott had initially agreed to sell Samsung C&T shares back to the company at 57,234 won apiece on conditions that it would be compensated for any difference between Samsung’s share buyback prices.

It was the second-largest shareholder of Samsung Group's de-facto holding company with a 71.2% stake and protested the merger.

In May 2022, Elliott received an additional 72.4 billion won from Samsung C&T, the difference between its disposal price of 57,234 won and the 66,602 won endorsed by the Supreme Court of Korea in April 2022.

Elliott complained about the compensation. It argued the additional payment reflected the period of only September 2015 and March 2016, during which it had disposed of Samsung C&T shares. Thus, Samsung discriminated it against other shareholders, for which the payment included the almost seven-year period from September 2015 and May 2022.

But the district court turned down such claims.

The saga of legal disputes surrounding the controversial merger between Samsung C&T and Cheil Industries is still ongoing, involving Samsung Group Chairman Jay Y. Lee, South Korean government and the National Pension Service.

Elliott has brought the case to the International Center for Settlement of Investment Disputes (ICSID) and the tribunal partially accepted its claim for comensation, including the accrued interest and legal costs, in 2023.

But South Korea's justice ministry has taken a counter legal action to challenge the ICSID's decision to pay $53.6 million to Elliott.

In February, the Seoul Central District Court cleared Samsung’s Lee of charges of illegal activities related to the Samsung C&T-Cheil Industries merger, which ended up tightening his grip over the world’s largest chipmaker Samsung Electronics Co.

Write to Yong-Hoon Kwon at fact@hankyung.com
Yeonhee Kim edited this article