Corporate Merge Paves The Way For Samsung Heir

I did not realize how little of Samsung Electronics that the Lee family actually owned:

SEOUL, South Korea (AP) — Two key Samsung companies are merging in a step toward ensuring the son of the group’s ailing chairman inherits control of the theme parks to smartphones conglomerate.

Samsung said Tuesday that its defacto holding company Cheil Industries Inc. will acquire Samsung C&T Corp. by offering 0.35 new Cheil shares for every Samsung C&T share.

The move, to be completed by Sept. 1, requires shareholder approval, which is expected. The combined entity will be named Samsung C&T.

Analysts say the transaction will give Samsung heir Lee Jae-yong a big say in the conglomerate including its crown jewel Samsung Electronics Co.

“Samsung Electronics is at the core of this event,” said Park Ju-gun, president at CEOScore, a private corporate watchdog. “If Lee Jae-yong controls C&T, he can secure control over Samsung Electronics.”

The corporate maneuvering reflects that the Lee family’s influence over Samsung Electronics through a life insurance company was at risk as the South Korean parliament is set to pass a law that restricts finance companies from controlling non-finance companies.

Lee, his father Lee Kun-hee and other family members have a small direct stake in Samsung Electronics but have been able to exert influence through cross shareholdings in affiliated companies, the most significant of which was Samsung Life Insurance. Altogether, they control about 29 percent of Samsung Electronics shares, which is the largest voting bloc.

Lee Kun-hee, 73, who remains chairman at Samsung Electronics, has been hospitalized for more than a year after suffering a heart attack in May, 2014. Lee Jae-yong earlier this month took over his father’s roles in two Samsung charitable foundations.

The Lee family will likely take additional steps to enlarge C&T’s stake Samsung Electronics as a lynchpin of the cross shareholdings, said Park. It currently owns 4.1 percent of the electronics giant.  [Associated Press]

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