Samsung C&T, D-1 Before AGM Vote Battle...Global Attention on Activist Fund Pressure

by Byun Seonjin

Published 14 Mar.2024 16:31(KST)

Samsung C&T, which is under pressure from activist fund coalitions to return value to shareholders, is set to face a vote showdown at its shareholders' meeting on the 15th over ways to increase corporate value, drawing market attention, Bloomberg reported on the 14th (local time).

Samsung C&T, D-1 Before AGM Vote Battle...Global Attention on Activist Fund Pressure

According to Bloomberg, five activist funds, including the UK-based asset manager City of London, the US's Whitebox Advisors, and Korea's Anda Asset Management, recently proposed that Samsung C&T pay a cash dividend of 4,500 KRW per common share (4,550 KRW per preferred share) and conduct a 500 billion KRW share buyback. The total scale exceeds 1.2 trillion KRW. The combined stake of the five activist funds is 1.46%. They are expected to receive support from foreign shareholders such as the California Public Employees' Retirement System.

Instead, Samsung C&T has asked shareholders to approve the board's proposal to pay a dividend of 2,550 KRW per share at the shareholders' meeting. The company explained that the scale demanded by the activist fund coalition would impose a managerial burden and restrict securing funds for growth.

However, Bloomberg evaluated that "Samsung Construction, controlled by Korea's top conglomerate, rejecting this shareholder proposal may appear to oppose the corporate value value-up program policy that the Yoon Suk-yeol administration is focusing on." James Smith, Chief Investment Officer (CIO) of UK-based Palisade Capital, pointed out, "If many votes come from minority shareholders, it will be a strong signal showing the dissatisfaction of small investors with Samsung C&T's current management direction," adding, "If there is a change in Samsung's way of increasing corporate value, it could set a significant precedent for other companies."

Samsung C&T is the largest shareholder of Samsung Biologics and a major shareholder of Samsung Electronics, Asia's largest electronics company. However, Samsung C&T's stock price has lagged significantly behind those of the companies in which it holds shares. Cha Soyoon, a fund manager at BNK Asset Management, explained, "Samsung C&T is a representative case of the Korea discount," noting, "While the stock prices of Samsung Biologics and Samsung Electronics have risen several times, Samsung C&T has not increased much."

Meanwhile, ahead of the vote showdown, investors are also paying attention to the decision of the National Pension Service, which holds a 7% stake in Samsung C&T, Bloomberg added.