US hedge fund Elliott to appeal Korean court ruling on merger of Samsung affiliates

US hedge fund Elliott said it would appeal a South Korean court's decision in favour of the merger between two Samsung affiliates – Samsung C&T and Cheil Industries – which it sees as "neither fair nor in the best interests" of Samsung C&T's shareholders.

The fund said in a statement that it was disappointed with the court's decision not to grant a preliminary injunction to prohibit Samsung C&T from seeking shareholder approval for the merger.

Elliott Associates also said it remains committed to preventing the takeover and has filed an appeal. The fund added that it "is confident that its position will be fully vindicated on appeal."

"Samsung C&T has a long history of producing value for its stakeholders and Elliott cannot see the sense of such a large portion of that value being blatantly given away to the shareholders of Cheil Industries," the fund said in a statement.

"Elliott's view is that the prospect of Samsung C&T shareholders being railroaded into such a bad deal has led to a depressed share price, which is well below historical norms. In the circumstances, Elliott expects that the proposed merger not proceeding would alone be of real benefit to Samsung C&T shareholders."

Elliott Associates, which is the third-largest shareholder in Samsung C&T, has been engaged in a row with the construction company after it agreed to be taken over by Cheil Industries, in which Samsung Electronics vice-chairman and heir apparent Lee Jae-yong is the major shareholder.

As per the deal, each Samsung C&T share will be exchanged for 0.35 of a share in Cheil Industries, valuing the acquisition target at more than $8bn (£5.2bn, €7.3bn).

The merger is widely seen as the family's attempt to ensure control of the group, ahead of an expected leadership succession. Samsung group's chairman, Lee Kun-hee, has been bedridden following a heart attack in May 2014.

The deal is subject to the approval of shareholders of both companies. The shareholders are to vote on the proposal on 17 July, and a two thirds majority is required to approve the deal.