New York hedge fund Elliott Management, run by billionaire activist investor Paul Singer, thinks the merger of the two subsidiaries is bad for shareholders, arguing the sweetheart deal to Samsung’s founding family (which owns large stakes in the subsidiaries) doesn’t benefit the rest of its stockholders.

“We believe these moves are positive and necessary for the long-term health of investing not only in Samsung but in the Korean equity market in general as it helps ensure that minority shareholder rights are upheld and nothing crazily one-sided will be done”, they said.

“What we’re witnessing here is a new phase in investor-corporate interaction in South Korea”, said Charles Lee, research director for North Asia with the Hong Kong-based Asian Corporate Governance Association.

In a country not known for investor activism, the campaign against the takeover of construction company Samsung C&T by affiliate Cheil Industries has been unusually loud. It has also mobilized employees to visit shareholders with mango juice and watermelon.

Some analysts have suggested the next step in the simplification of the Samsung ownership structure could be a merger of Samsung Electronics (005930.KR) and information technology unit Samsung SDS.

Matters took an ugly turn when business publications used anti-Semitic smears to attack Elliott and its founder.

C&T’s biggest shareholder, South Korea’s National Pension Service (NPS), cast its 11.2 per cent voting stake in favour of the deal, said a person with direct knowledge of the matter, providing decisive support for Samsung.

Elliott is disappointed that the takeover appears to have been approved against the wishes of so many independent shareholders and reserves all options at its disposal”,

the fund said in an e-mailed statement.

The vote is likely to be a close contest.

Samsung has started testing its mobile payments service Samsung Pay in South Korea for users of its Galaxy S6 and S6 Edge devices. It has refused to comment.

About one quarter of C&T shares are owned by foreign investors and another quarter by mom-and-pop South Korean investors that have not publicly disclosed their position.

Samsung was also hit by Apple’s launch of iPhones with larger screen sizes and a stronger won, the company concluded in its financial results for the first quarter.

After reporting on the spat earlier this week, the U.S.’s “Observer” website received an email from Kwang Seop Han, the executive vice president and head of communications at Samsung C&T, saying: “Regarding the cartoons referred to in your article, we now understand, however unintentionally, that they can offend”.