Samsung C&T shareholders approved a $7.7 billion all-stock takeover offer from Samsung's de facto holding company Cheil Industries on Friday, underlining the dominance of South Korea's family-run conglomerates, or chaebols.
Shares of Samsung C&T and Cheil Industries lost as much as 9 and 7 percent respectively, while Samsung Electronics popped 2 percent after the decision was announced.
The proposed deal is part of a restructuring program driven by the founding Lee family to consolidate power over Samsung Electronics, the prize of all the Samsung affiliates. Buying Samsung C&T would give Chiel control of the former's 4 percent stake in Samsung Electronics, making the new entity created under the merger one of the largest investors in the smartphone maker.
The move would also help the Lee family cement their grip on the Samsung brand ahead of a key leadership transfer. Lee Jae-yong, currently vice-chairman at Samsung Electronics, is widely expected to take over once his father and current chairman Lee Kun-hee officially steps down. The health of the senior Lee remains in focus after he suffered a heart attack last year.
"Looking at [Thursday's] share price of Cheil Industries, the stock was up quite a bit so I think the market was betting that Samsung would get the merger to go through," said Michael Na, Nomura's Korea strategist, adding that Samsung tried really hard to win over retail investors. Cheil shot up as much as 5 percent on Thursday.