SINGAPORE – Activist investor Flashlight Capital Partners has requested the shareholder registers of five units of the powerful Samsung conglomerate that hold a substantial stake in S-1 Corporation, stepping up a campaign to improve returns at the South Korean security company.
Sanghyun Lee, the founder and CEO of Singapore-based Flashlight, is seeking to reach out to shareholders of five units of the chaebol that he characterised as exerting outsized influence over S-1, which has lagged behind the returns of the benchmark KOSPI over the past few years.
The five companies – Samsung SDI, Samsung Life Insurance, Samsung Fire & Marine Insurance, Samsung Securities and Samsung Card – collectively own 20.6 per cent of S-1 Corp’s shares, according to shareholder information on its website.
S-1’s biggest shareholder is Japan’s SECOM, with a 25.7 per cent stake, though Samsung Group usually appoints one of its executives as CEO.
S-1 also holds 11 per cent of its own stock as treasury shares, a practice that critics say allows management to exercise a defence against hostile takeovers.
“With access to the shareholder registers, we will be able to communicate directly with the shareholders of these five companies,” Lee said.
“These shareholders have a direct interest in ensuring that their boards properly evaluate our offer and make the decision that best serves shareholder interests,” he said in a press release.
“We intend to reach as many of them as possible.”
Samsung Group and its five affiliates did not respond to requests for comment while S-1 said it has “no position to state”.
“This matter concerns a proposal by one of our shareholders to purchase shares held by other shareholders,” a spokesperson for S-1 said.
In June, Flashlight launched a campaign to improve shareholder returns at S-1, revealing a US$40 million (S$50.58 million) stake, or about 2 per cent of its market capitalisation.
In August, Lee escalated the campaign, offering to buy all of the S-1 shares held by the five units of Samsung Group for 906.6 billion won (S$854 million). He also said he has accumulated a small stake in each of the five Samsung units.
“There is no strategic rationale for Samsung’s lithium battery and financial-services affiliates to continue holding shares in a security-services company given the absence of meaningful business synergies,” Lee added.
When Lee, a former Korea head at The Carlyle Group, submitted a 116,000-won-per-share all-cash offer on Aug 27, it represented a 45.2 per cent premium over S-1‘s 79,900 won closing price a day earlier.
So far, he has made little headway in securing concessions from S-1 and Samsung Group. S-1‘s shares opened 0.4 per cent lower at 78,900 won as trading began in Seoul on Sept 9. REUTERS
