The head of Samsung C&T Co., a construction and trading arm of Samsung Group, said Wednesday he believes the National Pension Service, the firm's single largest shareholder, will vote for the merger with a group affiliate at next week's shareholder meeting.

Samsung C&T shareholders are scheduled to meet on July 17 to cast ballots on Cheil Industries Inc.'s proposal to take over the builder in an all-stock deal worth 8.9 trillion won ($7.93 billion). Cheil Industries is the de facto holding firm of the top family-controlled conglomerate in South Korea.

"I believe the NPS will make a wise decision," Samsung C&T CEO Kim Shin said. "Samsung C&T is positive about the outcome of the proposed merger."

The NPS currently holds an 11.21 percent stake in Samsung C&T.

Kim's remarks came as shareholders of Samsung C&T remain divided over the merger plan, with U.S.-based hedge fund Elliott Associates leading the pack of holdout investors.

The proposed merger must win approval from shareholders with two-thirds of the voting rights and a third of outstanding shares.

The construction and trade arm has secured friendly forces with a combined 19.95 percent stake, including the 5.76 percent interest owned by KCC Corp., which it acquired by purchasing treasury shares from Samsung C&T.

But Samsung C&T must secure 47 percent support to have the plan pass at the meeting, given that the attendance rate will likely stand at 70 percent for the upcoming meeting, according to market watchers.

Elliott, which holds a 7.12 percent stake, can have the plan scrapped by obtaining more than 23 percent of friendly shares.

Ilsung Pharmaceutical, a local drugmaker with a 2.11 percent stake, earlier signaled it will vote against the plan.

The NPS has not yet made a clear statement on the issue, but the Korea Corporate Governance Service, which was asked by the pension operator to review the merger, concluded Wednesday it should not vote for Samsung C&T.

The advisory institution is founded by the main bourse operator, the Korea Exchange, and the Korea Financial Investment Association.

Against such a backdrop, Elliott again sent a letter to shareholders Wednesday, urging them to lend support to its voice.

"Whilst Elliott understands and is supportive of the need for a restructuring of the Samsung Group in connection with the potential succession of control over it, such a restructuring should not be implemented without proper corporate governance safeguards or at the obvious expense of the shareholders of Samsung C&T," it said in the English letter.

Elliott has been claiming that the merger is disadvantageous for Samsung C&T shareholders.

In early June, the hedge fund filed two injunctions with a Seoul court to stop the builder from holding a shareholder meeting and restrict the voting rights of Samsung-friendly KCC Corp.

But the Seoul Central District Court has rejected the injunctions, ruling in favor of the South Korean conglomerate and clearing legal hurdles in the proposed merger.

Market watchers remained split over the issue.

Last week, corporate advisory firm Institutional Shareholder Services Inc. said the latest merger plan "significantly disadvantages Samsung C&T shareholders," lending a voice to further Elliott's claim.

But the same advisory firm said Wednesday that shareholders of Cheil Industries should support the merger plan, also insisting that the merger will benefit shareholders of the de facto holding firm over those of Samsung C&T.

Samsung C&T, however, claimed Wednesday that out of 22 South Korean brokerage houses that delivered reports on the propsed merger, 21 agreed that the move will bring more good than harm.

"Samsung C&T will continue to promote the fact that the merger will benefit both the company and shareholders," it said.

The merger, meanwhile, is also widely seen as aiming at paving the way for the transfer of power from hospitalized tycoon Lee Kun-hee, 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. The new merged entity will keep the name Samsung C&T as it is one of the original arms of Samsung Group. (Yonhap)