After a tense, six-week showdown between Elliott Management and Samsung’s founding family, the South Korean government has finally made an official remark regarding the Samsung C&T – Cheil Industries merger. It has their back – but with all due respect to Elliott, of course.
According to the WSJ, South Korea’s deputy prime minister and finance minister, Choi Kyung-hwan, has told the press that while his country’s corporate governance standards still has a lot to improve on, short term interests need to be balanced out:
“If you look at capital markets in Korea, it needs to be improved further up to the global standard… …If you look at more mature economies like the U.S., where activist investors are more prevalent, I know there are criticisms that their interests are too short-term, so we need to have balance.”
He also said that South Korea welcomes foreign investors, “as long as their investment and actions are within the legal framework.”
The bitter fight between the activist fund and the Lees has raised several concerns over South Korea’s Chaebol – the dominant, family-run conglomerates within the country – focusing especially on the opacity behind their decision making – are they doing it for themselves, or for their shareholders?
This, including weak corporate governance, are attributed for creating what is now known as the “Korea discount,” the lower valuation of South Korea’s shares compared to its peers. Whether or not that’ll get fixed, only time can tell.
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