People’s Solidarity for Participatory Democracy, one of the civic groups participating in the lawsuit, claimed that the merger between Cheil Industries and Samsung C&T in July 2015 was made to benefit the Samsung family and strengthen their grip on Samsung Electronics, the crown jewel of the conglomerate.
“Samsung Group’s heir Lee Jae-yong and heiresses Boo-jin and Seo-hyun have now become the largest shareholders of the firm thanks to the merger,” the PSPD said in a statement.
The alliance, formed of five advocacy groups including the Public Pension for All, and the Lawyers for a Democratic Society, said C&T intentionally scaled down its sales and businesses to lower its share price in 2014.
The group also accused the NPS of supporting the merger by violating a rule that requires an advisory board to be formed before making an important decision.
“The NPS neglected its duties to run its public fund in a stable manner and, at the same time, maximize the profits of its subscribers,” the group said.
It argued that the stock price of Samsung C&T, at 57,234 won ($48), was set lower than the stock’s actual value when the companies were merged.
An appeals court on May 31 ruled in favor of minority shareholders who had sued C&T for stock price manipulation, overturning the decision of a lower court.
The higher court ordered the firm to increase the stock purchase price proposed to shareholders who were opposed to the firm’s merger to 66,602 won, the market price before rumors of the merger went viral in the market.
The Lee family made profits of around 372 billion won out of the merger deal while the minority shareholders and the NPS lost around 524 billion won and 58 billion won, respectively.
Vice chairman Lee is the largest shareholder of C&T with a 17.2 percent stake.
The construction business, which owns 4.1 percent of Samsung Electronics, owns 19.3 percent of Samsung Life Insurance.
The insurance business unit holds 7.6 percent of the tech firm.
By Kim Young-won (firstname.lastname@example.org)