Minority shareholders of Samsung C&T who filed a lawsuit claiming they suffered financial losses because the merger between Samsung C&T and Cheil Industries was unfairly executed to secure managerial succession for Samsung Electronics Chairman Lee Jae-yong have lost their case in court.

The 30th Civil Division of the Seoul Central District Court (Presiding Judge Kim Seok-beom) ruled against the plaintiffs today (October 29) in a damage suit filed by 26 shareholders, including an individual surnamed Shim, against Samsung C&T and others.

The court dismissed all claims by the plaintiffs, stating that the liability for damages of Samsung C&T, its management, and Chairman Lee could not be recognized.

Samsung C&T and Cheil Industries resolved to merge in May 2015 by exchanging approximately three shares of Samsung C&T for one share of Cheil Industries.

Subsequently, the merger proposal was passed at an extraordinary general meeting of shareholders in July of the same year, and the merger was completed on September 1.

The plaintiffs who participated in the lawsuit are shareholders who received and held approximately 0.35 common shares of the merged Samsung C&T for every one share of the former Samsung C&T according to this merger ratio, or who disposed of them thereafter.

They filed a lawsuit worth 200 million won in 2020, arguing that the merger was unfairly conducted for the stable managerial succession of Chairman Lee Jae-yong.

However, the court judged that it is difficult to view the 2015 merger between Samsung C&T and Cheil Industries as having been carried out solely for the purpose of strengthening Chairman Lee's dominance over the Samsung Group.

The court pointed out, "The merger ratio in this case was calculated based on stock valuations in accordance with the Capital Markets Act through evaluations by external professional institutions," adding, "No special circumstances were found, such as intentional stock price manipulation or the intervention of acts prohibited by statutes."

It further judged that the merger cannot be deemed unfair simply because the asset sizes and values of Samsung C&T and Cheil Industries differed.

The court added that there is no evidence to show that the Samsung C&T directors at the time formally approved the merger or agreed to it under unjust instructions from the National Pension Service.

The court stated, "The directors of Samsung C&T approved the merger for the management interests of the company after thoroughly reviewing the company's financial situation and the benefits resulting from the merger," and added, "It cannot be seen that a conflict of interest occurred or that they violated their duties of care and loyalty in this process."

In addition, since Samsung C&T and Cheil Industries were separate companies before the merger, the court judged that failing to treat the shareholders of both companies identically does not constitute a violation of the principle of shareholder equality.

Meanwhile, Chairman Lee Jae-yong was put on trial on criminal charges of committing irregularities during the merger process, but was acquitted by the Supreme Court in July of last year.

(Photo: Yonhap News)