Activist investors are demanding the company deliver higher shareholder returns than it has proposed. — Bloomberg
SEOUL: A battle between shareholders of South Korea’s most valuable business group is set to test the nation’s commitment to enhance corporate returns and valuations.
The clash will take place today at the AGM of Samsung C&T Corp, which serves as the holding company of the Samsung Group.
Activist investors are demanding the company deliver higher shareholder returns than it has proposed, and proxy advisory firms Institutional Shareholder Services Inc and Glass Lewis & Co have advised institutional funds to back their case.
The construction firm, which is controlled by South Korea’s richest family, is unlikely to cave in to the pressure although such a move would signal its resistance to the “Corporate Value-up Programme” that is one of President Yoon Suk Yeol’s signature policies.
Other family-controlled big businesses or chaebol are likely to monitor the outcome of the gathering as they weigh their next course of action in dealing with shareholder demands.
Billionaire Jay Y. Lee’s family and allies control about 40% of Samsung C&T. Activist funds including City of London Investment Group Plc and Whitebox Advisors LLC have a combined 1.46% stake, although they’re expected to win the support of foreign shareholders including the California Public Employees’ Retirement System.
Investors will also be watching the decision of the National Pension Service, which is the largest investor in South Korea’s stock market and the holder of a 7% stake in Samsung C&T.
“If there’s a high proportion of that minority, that will be a really strong signal of dissatisfaction by the minority investors on the current path of the company,” said James Smith, chief investment officer of Palliser Capital UK Ltd.
“If there’s a change in terms of value at Samsung, it sets a really great precedent for other companies.”
Palliser, which has a 0.62% stake in Samsung C&T, estimates corporate reforms in the company may unlock as much as US$25bil in value.
Last month, the company urged shareholders to vote against the activist investors’ request for a payout of 4,500 won per common share and for 500 billion won of share buybacks, saying that would pose a “burden on the management.”
The demands would also limit the company’s ability to secure investment resources for long-term growth, Samsung C&T added. — Bloomberg
