South Korea's S-1 jumps after activist makes $832m bid for Samsung's stake

SINGAPORE — Shares in South Korean security company S-1 Corp jumped seven per cent on Thursday (Aug 27) after investor Flashlight Capital Partners made a 906.6 billion won (S$832 million) offer for all of its shares held by units of the Samsung conglomerate.

The offer for the shares, which are owned by five affiliates of the Samsung Group, escalates Flashlight's activist campaign to improve shareholder returns at S-1.

Singapore-based Flashlight submitted a 116,000 won per share all-cash offer on Thursday, it said in a statement, representing a 45.2 per cent premium over S-1's 79,900 won closing price a day earlier.

"This matter concerns a proposal by one of our shareholders to purchase shares held by other shareholders," a spokesperson for S-1 Corp said. "The company has no position to state."

Samsung Group has not responded publicly to the offer or replied to Reuters requests for comment.

S-1's shares closed up 7 per cent at 85,500 won on Thursday

The size of the bid exceeds the assets of Flashlight Capital.

Founder Sanghyun Lee, a former Korea head at The Carlyle Group, said in a text message he has lined up financing for the bid through a mix of debt and equity

Collectively, Samsung SDI, Samsung Life Insurance, Samsung Fire & Marine Insurance, Samsung Securities, and Samsung Card own 20.6 per cent of S-1 Corp's shares.

Of the five smaller Samsung affiliates, Samsung Fire and Samsung SDI declined to comment, while none of the other three responded to requests for comment.

Flashlight owns a small minority stake in all five companies, said Lee, who in June launched a campaign seeking board changes at S-1, to improve returns.

"None of the five affiliates has a strategic reason to retain its S-1 stake," Flashlight said.

"[The] reason we can do this now is because of Korea's new Commercial Act that imposes a strict legal duty of loyalty on directors toward all shareholders," Flashlight added. "The answer from the five boards will show whether the directors work for their shareholders, or have become 'vassals' of the Samsung's Jay Lee family."

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