[FOCUS] Samsung group's ownership change in spotlight after stake sale

By Park Sae-jin Posted : September 19, 2016, 13:59 Updated : September 19, 2016, 13:59

[Aju News DB]


The corporate restructuring of South Korea's largest family-run conglomerate Samsung Group was thrown into the spotlight again on Monday after Samsung Electronics disclosed the sale of its shareholdings in four overseas technology firms.

The tech giant said Sunday that it has sold half of its three percent stake in Dutch semiconductor company ASML Holding NV. and a 4.2 percent stake in Seagate Technology Plc., an American hard drive manufacturer. Samsung has also disposed of 4.5 percent in US-based semiconductor and Internet protocol producer Rambus Inc. and 0.6 percent in Japan's Sharp Corp.

The sale that could fetch about one trillion won (888 million US dollars) was aimed at focusing on core businesses, the group said in a statement as it did last week in a $1.05 billion agreement to sell its printer business unit to US personal computer maker HP Inc.

Samsung, which accounts for about one-fifth of South Korea's economy, has been at the center of global attention since it announced a global recall on September 2 due to faulty batteries for its flagship smartphone Galaxy Note 7.

The rare recall has disappointed investors, dragging down Samsung's share price, but the company stopped a helpless fall in its brand value after vice chairman Jay Y. Lee, the only son of bedridden group head Lee Kun-hee, was nominated as a registered board member a week ago.

The nomination, which should be approved at a shareholders meeting on October 27, fueled speculation that the group would step up efforts to streamline its bloated structure to focus on futuristic businesses like bioengineering, smart auto parts, batteries.

Market watchers welcomed the nomination as a timely move that could play a catalytic role in thwarting a tough challenge to Samsung' brand value and reliability as the world's largest smartphone maker. 

As a board member, the 46-year-old vice chairman would play a more active role in decision-making and assume legal accountability for mismanagement at a critical time when Samsung Electronics faces tough competition at home and abroad.

Jay Y. Lee joined Samsung Electronics in 1991 and became vice chairman in 2012. Without assuming a registered director position, he has controlled group management from behind especially since his father was hospitalized in May 2014 after being hit by a stroke.
 
In September last year, the group completed a merger of Cheil Industries and Samsung C&T, the group's trading arm and virtual holding company. The deal helped the Lee family cement control by allowing the group to strengthen its cross-ownership structure because the merged affiliates had stakes in other units.

However, Jay Y. Lee has yet to raise his stake in Samsung Electronics, an inevitable choice for him to complete the transfer of group ownership. He owns a 0.59 percent stake in Samsung Electronics, 17.23 percent in Samsung C&T and 9.2 percent in Samsung SDS. Samsung C&T holds a 4.1 percent stake in Samsung Electronics.

The group has raised a huge amount of money in reserve through the sale of non-core units and restructuring to cope with massive inheritance taxes.

Analysts have suggested a possible scenario that the group would be streamlined into two major sections with Samsung Life Insurance controlling financial units and Samsung Electronics spearheading nonfinancial affiliates such as Samsung SDS.
 
Aju News Lim Chang-won = cwlim34@ajunews.com 
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