“Merger of Samsung C&T, proceeding legally … Shareholder benefit: positive effect of improved management”

▲ Jaeyong Lee, Vice President of Samsung Electronics

Amid the merger allegations between Samsung C&T and Cheil Industries in 2015 and the related trial resumed after five months, Samsung’s defense attorneys argued that it was a legitimate business activity and that all proceedings were carried out. carried out legally.

On the contrary, after the merger, Samsung C&T faced the prosecution’s claim that no company has suffered losses such as improved management, but instead made a profit and caused damage to Samsung C&T shareholders.

Part 25-2 of the Seoul Central District Court Criminal Settlement held a second trial date for the Samsung C&T bio-accounting and merger allegations at the Seoul Central District Court at 2 p.m. on the 11th.

On this day, the attorneys used a presentation file (PPT) to focus on the fact that the merger process between Cheil Industries and Samsung C&T was normal and claimed innocence. This case allegedly tampered with the ledgers at the time of the merger between Cheil Industries and Samsung C&T in September 2015. The Samsung Group is said to have made the merger relationship between Cheil Industries and Samsung C&T favor Cheil Industries by raising the Cheil Industries’ share price when evaluating the company’s value of Samsung Bio higher than it actually is.

The calculated melt ratio between Cheil Industries and Samsung C&T was 1: 0.35. This index was determined as the weighted average of the market capitalization of each company during a month before the date of resolution of the board of directors as stipulated by the Capital Markets Law, but the accusation is raising suspicions.

First, the lawyers mentioned the various circumstances surrounding Samsung C&T at the time and mentioned that it was necessary for business. In the case of Samsung C&T, the merger proceeded with regulatory changes such as circular investment due to changes in government policy amid continued recession in the construction industry and huge losses from overseas projects.

Rather, it was noted that after the merger, Samsung C & T’s management performance and credit rating increased, which was positive. In particular, it noted that the prosecution’s argument that only Samsung C & T’s share price was deliberately undervalued was contradictory in a situation where all construction industry share prices were falling.

The lawyers said: “Samsung C&T has suffered more than 3 trillion insolvency due to the loss of projects abroad, and Samsung Engineering has been insolvent.” If it is expected to rise, institutional investors do not need to sell net. ”

“There is an expression in the public notice that Cheil Industries is overvalued and Samsung C&T is undervalued. To what extent is it dominant?” Why would you have bought it? “

Consequently, he explained that the merger index was determined in accordance with the price of the shares of each company during one month before the date of resolution of the board of directors as stipulated in the Capital Market Law.

The lawyers said: “The purpose of establishing the merger index as the share price is to ensure objectivity through the share price, because if the index is established through negotiations between the two companies, or if it is determined by valuation at that time, there will be controversial whether it is really fair. ” He said: “The allegations that the stock price has been manipulated are not included in the facts of the prosecution, but are only raising suspicions. In the end, it seems that it was revealed that it was not intentionally manipulated even in the investigation to long term of the prosecution, “he said.

Along with this, the lawyers argued that it was difficult to believe that the merger caused harm to the company and shareholders in connection with the alleged labor denial.

The lawyers said: “The board of directors of Samsung C&T decided to merge after sufficiently reviewing the business viability.”

In this case, the investigation of this case was carried out over several years, with dozens of seizures and raids, and more than 400 subpoenas of executives and employees of affiliates, and the total number of subpoenas exceeds 800 times ”. In this case, the decision was made to suspend the execution of the provision, etc. ”, He added.