With a crucial shareholder meeting for a proposed merger with its sister firm a week away, Samsung C&T Corp., Samsung Group's construction and trading arm, is ratcheting up its efforts to win more pro-merger shareholders, particularly minority stakeholders, industry sources said Saturday.

Although the country's state pension fund, the National Pension Service, has decided to back the high-profile merger between Samsung C&T with Cheil Industries Inc., the group's de facto holding firm., it is still unclear if Samsung C&T will win the neck-to-neck race, fending off a challenge from U.S. hedge fund Elliott, which is also pitching for more support from shareholders to block the deal.

On Friday, the National Pension Service, Samsung C&T's single largest shareholder with a 11.2 percent, has opted to vote for the merger plan, deemed crucial for the leadership change from the group's patriarch Lee Kun-hee from his only son Jay-yong.

Currently, shareholders with an estimated 31 percent stake are classified as the merger-friendly group, which includes other Samsung affiliates and KCC Corp. which holds some 6 percent stake in Samsung C&T.

And the pro-merger stake could rise to over 40 percent if local institutional investors who are estimated to own a combined 11.05 percent stake in Samsung C&T, give a nod to the proposed merger.

But Samsung C&T needs an additional merger-friendly stake ranging from 5 percent to 12 percent to push ahead with the merger, which means that minority shareholders whose combined stake is estimated at 24.4 percent could become swing voters.

Disgruntled with what they call not "a fair merger ratio," some minority shareholders have already delegated their voting rights to Elliott, which owns a 7.1 percent stake in Samsung C&T.

According to the sources, top executives of Samsung C&T and its employees are visiting minority shareholders' homes to ask them to back the merger.

"There is no 'plan B,' and we are working hard to win backing from even one more minority shareholder," said an official at Samsung C&T.

Elliott is also striving to win a proxy vote by appealing to minority shareholders not to back the merger deal as there still is a chance to stop the merger.

Foreign shareholders, excluding Elliott, are estimated to have a combined 26.41 percent in Samsung C&T. Elliott will be able to block the merger if at least half of offshore investors vote against the deal.

Samsung's planned merger has sparked a heated debate, with different parties casting various opinions on the matter.

In recent reports, corporate advisory firm Glass Lewis & Co., Institutional Shareholder Services (ISS) and South Korea's Korea Corporate Governance Service said that the merger undermines the interest of Samsung C&T shareholders.

In two separate rulings, a local court said that the proposed merger is reasonable and legitimate, lending support to Samsung's latest restructuring move.

The proposed merger is widely seen as aiming to pave the way for the transfer of power from hospitalized tycoon Lee, South Korea's richest man, to his only son Jay-yong.

Once the merger is completed, Jay-yong will become the biggest shareholder of the merged entity with a 16.5 percent stake and rise to the top of the group's hierarchy. (Yonhap)