Stake sale signals major shift in control of Samsung Group


Samsung Card Co. said on Wednesday it plans to sell its 20.64 percent stake in its affiliate Samsung Everland Inc., which acts as Samsung’s Group’s holding company, sparking keen interest about possible stake buyers.

Samsung Card, which owns a 25.6 percent stake in Everland, said it sent request documents to foreign investment banks on Aug. 26, adding that a block deal and other options are on the table, but did not elaborate on the schedule.

The move by Samsung Card, a major credit card company in Korea, is to follow through on the financial industry bill that bans a financial firm from holding more than 5 percent stake in non-financial companies.

Under the bill, Samsung Card is required to deal with its stake in Everland by April next year, settling for a 5 percent stake.

Analysts said the stake sell-off could be worth more than 1 trillion won ($911 million), a huge sum of money that could have an impact on all the firms involved in the transaction, as well as the related industries.

More importantly, the completion of the stake sale by Samsung Card signals a new era for Samsung Group’s complex ownership structure, which has long been under public criticism.

Samsung Everland, which runs an amusement park and food and accommodation services, is a major shareholder of Samsung Life Insurance Co., which in turn holds a 7.4 percent stake in Samsung Electronics, Asia’s biggest technology company and also Samsung’s flagship unit.

The chain of ownership does not stop there. Samsung Electronics controls a 35.3 percent stake in Samsung Card, forging an interlocking ownership structure that often defies close scrutiny.

What has been under particular attack is that Lee Jae-yong, the only son of Samsung Electronics chairman Lee Kun-hee, holds a 25.1 percent stake in Everland, thereby placing all the key Samsung units under his control through cross-share ownership after a series of controversial succession steps.

The stake sale is therefore likely to help reconfigure Samsung Group’s governance structure that has been in place for the past 15 years. Although Samsung Group’s current family-oriented top executives are unlikely to see their grip on the country’s biggest conglomerate weaken as a result of the sale, a new governing structure, possibly involving a holding company, might emerge, or third-generation top managers including Lee Jae-yong could play a bigger role in the operations of key Samsung affiliates.

By Yang Sung-jin(insight@heraldcorp.com)