Foreign-owned shares surpass majority stakes held by group owners at roughly 17 percent of South Korea’s top 10 conglomerates, market data showed Sunday, signaling the significant level of influence outsiders can exert over management at major Korean companies.

Foreign shareholders hold more stakes than the conglomerate owners themselves at 16 out of 97 subsidiaries established under the 10 conglomerates, according to data released by Chaebul.com.

That marks around 17 percent of the country’s leading conglomerates that stand accountable for the business interests of foreign shareholders.

Six out of Samsung Group’s 18 subsidiaries saw foreign shares outrun owner-held shares, alongside three of Hyundai Motor Group’s 11 affiliates, three of 12 LG Group’s subsidiaries, three of SK Group’s 18 subsidiaries and one of GS Group’s eight subsidiaries.

Moreover, the companies that saw high percentages of foreigner-owned stakes were central businesses for the Korean conglomerates. 


Samsung Group chief Lee Kun-hee, members of the Lee family and other Samsung affiliates owned 29.57 percent of Samsung Electronics ― the group’s central pillar ― while its foreign shares took up a significantly larger portion at 51.82 percent.

The distribution picture was similar at other Samsung affiliates, including Samsung C&T in which foreign shareholders owned a 33.08 percent stake, in comparison to the 19.63 percent stake held by those related to the group.

Foreign stakeholders also dominated Samsung SDI, Samsung C&T’s majority stakeholder, with a 39.09 percent stake while the group’s ownership reached just 18.53 percent of the total company shares.

The three core subsidiaries of Hyundai Motor Group ― Hyundai Motor Co., Hyundai Mobis and Kia Motors ― and SK Group’s major affiliates ― SK Telecom, SK hynix and SK Innovation ― also saw higher foreign shares in comparison to group-owned stakes.

A recent case reveals how such ownership structures grant foreign stakeholders strong influence over the decision-making processes at Korean conglomerates.

Last week, Samsung C&T’s third-largest shareholder ― U.S.-based hedge fund Elliott Associates with a 7.2 percent stake in the firm ― opposed its proposed merger with fellow Samsung affiliate Cheil Industries.

Other foreign shareholders are also reportedly weighing in on the U.S. hedge fund’s argument that the “proposed takeover undervalues Samsung C&T” and that “the conditions of the merger are neither fair nor in the best interests” of the company’s shareholders.

Elliott’s move could increase pressure on Cheil Industries to improve its offer on the mergers and acquisitions deal and hamper what analysts perceive as the founding Lee family’s moves to consolidate its control over the group’s various affiliates, particularly Samsung Electronics, ahead of an expected leadership succession.

By Sohn Ji-young (jys@heraldcorp.com)