Elliott loses appeal over $19 mn claim against Samsung C&T

A South Korean appellate court has rejected Elliott Investment Management Corp.’s claim for 26.7 billion won ($19.3 million) in interest for a late payment from Samsung C&T Corp. related to the 2015 merger between Samsung C&T and Cheil Industries Corp.

On Thursday, the Seoul High Court dismissed Elliott’s appeal, upholding the lower court’s ruling delivered last September that the US-based hedge fund was not entitled to further compensation beyond the 72.4 billion won it had already received from Samsung C&T in 2022 as part of a confidential settlement agreement between the two parties. 

Elliott, once the second-largest shareholder of Samsung C&T with a 7.12% stake, opposed the Samsung C&T-Cheil merger in 2015, arguing that the company’s share buyback price of 57,234 won per share was significantly undervalued.

But Elliott eventually sold Samsung C&T shares back to the company and withdrew its legal appeal on the condition that it would be compensated for any difference between Samsung’s share buyback prices under the confidential settlement between the two companies agreed upon in March 2016.

In May 2022, Samsung C&T paid Elliott an additional 72.4 billion won to cover the difference between its initial buyback price and the 66,602 won per share later endorsed by the Supreme Court.

However, in October 2023, the US hedge fund filed a new lawsuit claiming the Korean firm had underpaid it by omitting interest for late payment for the period for which other minority shareholders reportedly received interest.

Elliott argued that Samsung’s interest payments to other shareholders covered nearly seven years, while its compensation only included interest accrued between September 2015 and March 2016.

The fund claimed this amounted to unequal treatment and sought an additional 26.7 billion won.

Last September, the lower court, however, rejected Elliott’s interpretation of the settlement, ruling that the hedge fund was entitled to principal amounts only, and the appellate court has affirmed the decision.

The US fund could appeal the case to the Supreme Court.

The suit is separate from Elliott’s other legal battles regarding the Samsung C&T-Cheil merger.

In 2023, Elliott partially succeeded in an international arbitration case against the Korean government at the International Center for Settlement of Investment Disputes (ICSID).

But Korea’s justice ministry has taken counter legal action to challenge the ICSID’s decision that Samsung C&T pay $53.6 million, which included the accrued interest and legal costs, to the hedge fund.

Write to Seo-Woo Jang at suwu@hankyung.com

Sookyung Seo edited this article.