NEW YORK, June 18 — Hedge fund Elliott Associates LP laid out its case for blocking the proposed takeover of Samsung C&T Corp by Cheil Industries Inc, calling the terms “unlawful” and saying they created “open-ended regulatory risks”.

Elliott, led by billionaire activist Paul Elliott Singer, said in an online presentation that while it supports the restructuring of Samsung Group as it prepares for a generational transfer of power, the proposed deal undervalues Samsung C&T and falls short of corporate governance standards.

Seoul Central District Court is scheduled to begin hearings on the dispute tomorrow.

The takeover may also present regulatory issues stemming from the creation of new cross-shareholdings between Samsung Group affiliates and from Cheil’s status as the group’s de facto holding company, Elliott said.

The fund, which holds a 7.1 per cent stake in the target, also criticized the sale of Samsung C&T’s treasury shares to KCC Corp as an attempt to dilute the voting rights of C&T shareholders.

Samsung C&T, the construction arm of South Korea’s largest conglomerate, is working with Goldman Sachs Group Inc. and Credit Suisse Group AG as it fends off the challenge from Elliott, according to people familiar with the matter.

The dispute comes as Samsung’s owner family is trying to cement control of the group ahead of a once-in-a-generation leadership transition. — Bloomberg