Cheil Worldwide shares dive on possible stake sale

By Park Sae-jin Posted : February 17, 2016, 13:15 Updated : February 17, 2016, 13:15

[Aju News DB]


Shares in Cheil Worldwide Inc, a key advertising arm of South Korea’s iconic giant Samsung Group , plummeted Wednesday on news report that a near 30% of its stake held by Samsung Electronics and group firms may be sold to a French firm.

The reported stake sale comes as the country's most-powerful conglomerate is accelerating corporate restructuring to put group heir and Samsung Electronics vice chairman Lee Jae-yong onto center stage.

Cheil said in a brief stock market notice: "Discussion on multilateral co-operation is under way between main creditors and global agencies, but there is anything yet to take shape".

The notice  followed a report by the Seoul-based Hankyoreh newspaper that the group seeks to sell Cheil’s 28.44 percent stake to Publicis Groupe as part of its restructuring drive.

The French company will become the single largest shareholder of Cheil if the deal is completed.

Shares in Cheil were down around 9.0 percent at mid-morning Wednesday after diving as much as 14 percent earlier in the session.

In September last year, the group completed a merger of its de-facto holding company Cheil Industries and Samsung C&T, with the merged entity keeping the Samsung C&T name.

The deal helped the founding Lee family cement control by allowing the group to strengthen its cross-ownership structure since the merged affiliates had stakes in other companies.

The family-controlled group has shed thousands of jobs, reflecting its struggle to cut costs as its flagship Samsung Electronics, one of the world's largest mobile phone makers, was hit by plunging profitability of its handset business due to competition with Chinese players rolling out price-competitive models.

The merger in September was aimed at paving the way for the transfer of ownership from the group's de factor head Lee Kun-hee to his only son Lee Jae-yong, who has struggled to streamline the group's portfolio since his father was hospitalized in May 2014.

Samsung has also sought to sell non-core units in an effort to raise funds for massive inheritance tax at the risk of reducing group-wide cross-holdings, which have been used by South Korean conglomerates to maintain their control with minor stakes.

Alex Lee

 
기사 이미지 확대 보기
닫기