Ilsung Pharmaceutical, a South Korean drugmaker with a 2.11 percent stake in Samsung C&T Co., said Sunday that Samsung Group's bid to merge its construction and trade arm with Cheil Industries Co. is "unfair" for shareholders.
  
"It will not be easy to have the merger plan approved at the shareholders' meeting," said Yoon Seok-keun, who heads Ilsung Pharmaceutical, indicating it will likely vote against the bid at the shareholders' meeting slated for July 17.
  
"Share prices do not always reflect a firm's value in details," Yoon said, indicating that the merger ratio of 0.35 Cheil Industries share for one Samsung C&T share seems unfair. "It is unreasonable to set such a ratio based on share prices of a period of a few months."
  
While Yoon did not directly say that the company will vote against Samsung, he said, "we basically do not agree with any moves that damage Ilsung Pharmaceutical's rights as a shareholder."
  
Samsung's proposed merger is widely seen as aiming to pave the way for the transfer of power from hospitalized tycoon Lee Kun-hee, South Korea's richest man, to his only son, Jay-yong.
  
Shortly after the announcement of the merger, U.S.-based hedge fund Elliott Management, which holds a 7.12 percent stake in Samsung C&T, openly expressed its discontent against the bid.
  
The merger plan has sparked a debate, with some claiming that Samsung's move only benefits the group's owner family, while others insist that Elliott is abusing its rights as a shareholder.
  
Samsung C&T asked its shareholders to delegate their voting rights to the company on Thursday, a day after the hedge fund made the same request.
  
In an apparent bid to gird for a showdown at the shareholders meeting, Samsung C&T also offloaded 5.76 percent of treasury shares to ally KCC Corp., a move which Elliott claimed was illegitimate.
  
On Sunday, Samsung C&T stepped up its attack on Elliot, saying that its report translated for a Korean counterpart contained wrong information and was belatedly corrected.
  
In a letter sent to Samsung C&T directors on Feb. 4, Elliot wrote: "In light of the continued weakness in the company's share price, we find it inconceivable that any merger or acquisition proposal involving the company's equity could be properly justified by the directors."
  
The Korean report released on early Friday referred to "we" as "Samsung C&T" and was changed to "Elliot" later that day.
  
"It is hard to believe Elliot's statements as it disclosed incorrect information, among other things," Samsung C&T said in a release posted on its website. (Yonhap)