A Seoul court on Thursday ruled in favor of Samsung C&T Corp. in a legal battle raised by Ilsung Pharmaceutical Co. that suggested the company’s merger with Cheil Industries Inc. in 2015 should be nullified, citing unfavorable share swap ratio.

The Seoul Central District Court on Thursday turned down the request by Ilsung Pharmaceutical, former Samsung C&T shareholder asking to cancel the controversial merger with Cheil Industries, claiming that the merger undervalued Samsung C&T’s share price.

“The purpose of the merger cannot be seen as unfair just because it also carries the purpose of enhancing owner’s control,” the court said. “It cannot be concluded that the merger ratio was unfavorable to shareholders and that even if it was somewhat unfavorable it cannot be seen as outstandingly unfair.”

On July 2015, Samsung C&T approved the merger with Cheil Industries despite opposition from some of Samsung C&T’s shareholders. Ilsung Pharmaceutical and others opposed the merger saying that the merger ratio favors Cheil Industries and requested the company buy back their holdings. Samsung C&T proposed to buy back shares at 57,234 won per share based on the company’s stock price but Ilsung Pharmaceutical said the price was too low and filed a suit requesting the court to nullify the merger and separately to adjust the price.

In May, last year, the Seoul High Court accepted Ilsung Pharmaceutical’s request, saying that “the share buyback price proposed to shareholders that oppose to the merger was set too low.”

At the time, the high court ruled the shareholders should be offered 66,602 won per share, noting that there are contexts in which Samsung C&T allegedly purposely faced slump in sales to profit the owner family and the National Pension Service allegedly helped set the share price. The case is currently pending at the Supreme Court.

Samsung Group heir and Samsung Electronics Jay Y. Lee is currently engaged in a court battle on charges that he had received government favor and backing for the C&T and Cheil merger in return for bribes to the president’s confidential friend.

By Lee Hyun-jung and Lee Eun-joo

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