Lee Jae-yong, after 5 years, may shed the shackles of 'unfair merger'... Aims to secure的动力 for New Samsung

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Management succession through Samsung C&T and First Cloth merger? Supreme Court ruling on the 17th, 'impact' even with damage compensation lawsuit by National Pension Service.

(Seoul=UD News) Reporter Park Ki-ho = The upcoming Supreme Court ruling on the alleged improper merger between Samsung C&T and Cheil Industries on the 17th is drawing attention from the economic sector. This is due to the involvement of Lee Jae-yong, CEO of Samsung Electronics (005930), and other top executives at the Samsung Group, as well as the potential impact on the damage compensation lawsuit filed by the National Pension Service.

In particular, if Chairman Lee is acquitted, he will be able to shed the false accusation of using the National Pension Service to secure management succession and causing losses. It is expected that Chairman Lee's steps toward finding new growth drivers will also widen considerably.

Supreme Court ruling on 'unreasonable appeal' to be announced on July 17.

According to the legal community on the 27th, the Supreme Court's Third Division (Presiding Judge Oh Seok-joon) has set July 17 at 11:15 AM as the date for the final judgment hearing in Mr. Lee's case. This means that after 4 years and 10 months since the trial began, a conclusion will be reached.

Chairman Lee was indicted in September 2020 for allegedly improperly planning and pushing through the merger of Cheil Industries and Samsung C&T, and for being involved in the accounting fraud of 4.5 trillion won at Samsung Biologics, a subsidiary of Cheil Industries. Both the first and second instances found Chairman Lee not guilty on all 19 charges. Despite being acquitted in both the first and second instances, the prosecution faced criticism for filing a "frivolous appeal" when they appealed to the Supreme Court.

Amidst this, the National Pension Service has filed a lawsuit seeking over 500 million won in damages from Samsung C&T and Chairman Lee, claiming that they suffered losses due to the merger of Samsung C&T and Cheil Industries. The lawsuit is currently in the first-instance trial.

Samsung C&T and Cheil Industries resolved to merge in May 2015, and it was passed at an extraordinary shareholders' meeting in July of the same year. At that time, the National Pension Service, which held a 11.21% stake in Samsung C&T, supported the merger. However, former Minister of Health and Welfare Moon Hyung-pyo and former National Pension Service Fund Management Bureau Chief Hong Wan-seon were later sentenced to prison terms on charges including abuse of power and breach of trust. This led to criticism against Lee Chairman and the Samsung Group. It is said that the Lee Chairman and the Samsung Group felt the most aggrieved by the criticism that they had caused damage to the national pension, which is the people's retirement funds.

In the business community, it was expected that the Supreme Court would also rule in favor of acquittal, given that an appeal by the prosecution was considered unreasonable following the not guilty verdicts in the first and second trials. If the final ruling is not guilty, it is anticipated that Chairman Lee will be in a favorable position in the damages lawsuit filed by the National Pension Service.

The damage compensation lawsuit is about whether the National Pension Service has suffered losses due to the merger, but the connection becomes unclear as neither the argument of an unjust merger for the purpose of acquiring management control nor the accounting fraud has been fully recognized. Moreover, particularly depending on the standard time point, the share value of Samsung C&T varies, which also leads to a wide range in the estimated damages, resulting in criticism that the lawsuit itself cannot be established.

Chairman Lee's 'Expanded Actions' to Secure 'New Samsung' Momentum?

The economic sector is also watching Samsung's future moves with interest. It is expected that if the chairman completely shakes off the shackles of legal risks, he will secure the momentum to push forward with the New Samsung, while also accelerating the discovery of new growth areas.

실제 이 회장은 2심에서 무죄를 선고받은 후 한동안 중단됐던 대형 인수합병(M&A)을 비롯한 신기술 투자와 새로운 먹거리 발굴에 속도를 내고 있다. 이 회장에 대한 사법리스크를 이번 기회에 완전히 풀어줘야 한다는 목소리가 재계에서 분출하는 이유다.

Samsung Electronics has acquired FläktGroup, the largest air handling equipment company in Europe, based in Germany. The acquisition amount is around 2.3 trillion won, making it the largest M&A deal in eight years since Samsung Electronics acquired Harman, a vehicle and audio company, for $8 billion in 2017. Additionally, around the same time, through Harman, Samsung Electronics acquired the audio division of U.S.-based Masimo Corporation for $350 million.

The global tour has also been fully launched. Chairman Lee met with Sam Altman, CEO of OpenAI, and Masayoshi Son (Japanese name), chairman of SoftBank, on February 4, immediately after the second-instance not guilty verdict. They discussed AI investments. Chairman Lee also visited China and met with President Xi Jinping and other global company CEOs one after another. During his trip to China, Chairman Lee visited BYD and Xiaomi headquarters to discuss cooperation plans in semiconductor and automotive sectors. Afterwards, Samsung Electro-Mechanics secured a large-scale supply contract for multilayer ceramic capacitors (MLCC) from BYD. The market estimates that the contract size could be in the tens of billions of won, leading to an evaluation in the industry as 'Lee Jae-yong sales'.

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