U.S. hedge fund Elliott Management said Thursday it filed a court injunction to stop Samsung C&T Co. from selling treasury shares to chemicals maker KCC Corp., upping the ante in their showdown over a Samsung Group restructuring move.
  

The move came a day after Samsung C&T said it will sell 8.99 million treasury shares, or a 5.79 percent stake, to existing shareholder KCC, in an apparent bid to rally friendly forces ahead of next month's shareholder vote on the merger between Samsung C&T and Cheil Industries Inc., Samsung's de facto holding company.
  

Claiming the proposed merger "undervalues Samsung C&T and goes against the interests of shareholders," Elliot has opposed the merger. Last week, it applied for a court injunction to block the marriage.
  

"(The latest stake sale) is a desperate and unlawful attempt by Samsung C&T, its directors and their respective related parties to shore up voting support for the unlawful proposal for a takeover of Samsung C&T by Cheil Industries," Elliot said in a press release. 
    

The plan calls for Cheil Industries to offer 0.35 new shares for every Samsung C&T share, which Samsung C&T shareholders consider undervalued.
  

The proposed merger must win approval from shareholders with two-thirds of the voting rights and a third of outstanding shares in order to pass. The shareholder meeting is scheduled for July 17.
  

Samsung C&T's sale of treasury shares to KCC would raise the portion of merger-friendly shares from at least 13.99 percent to 19.75 percent.
  

Shortly after Elliott's announcement Thursday, Samsung C&T, the trading and construction arm of Samsung Group, said that the sale of the treasury shares to KCC is "legal and righteous."
  

"The move is necessary to protect the company and shareholders from overseas hedge funds that pursue profit-taking, and to improve its liquidity and financial health," the company said in a statement.
  

While Samsung Group claims the merger is in the best interest of the two firms, market watchers have been claiming that the main intent is to allow the group's heir apparent Lee Jay-yong to tighten his grip on the conglomerate, as his father has been hospitalized since May last year.

A South Korean group of retail investors, meanwhile, agreed Tuesday to lend support to Elliott, with their shares taking up 0.43 percent of the total. The Netherlands-based pension fund APG, which holds a 0.35 percent stake, has also reportedly said it is against the merger. (Yonhap)