Feb. 1 (Bloomberg) -- Samsung Electronics Co. Chairman Lee Kun Hee will retain control of Asia’s biggest consumer-electronics maker after a court rejected relatives’ bids for a 4.1 trillion-won ($3.7 billion) stake in the family group.
The brother, sister and three other family members of billionaire Lee, 71, failed to prove they should be given the stakes in Samsung Electronics and Samsung Life Insurance Co., the Seoul District Court ruled today.
The family feud comes as Samsung Electronics barrels ahead of Apple Inc., Sony Corp. and Panasonic Corp. as the world’s biggest maker of mobile phones, TVs and computer-memory chips. The Suwon, South Korea-based company boosted fourth-quarter profit 76 percent after shipping one of every three smartphones and selling one of every four flat-panel TVs.
Lee’s brother Lee Maeng Hee and sister Lee Sook Hee, who don’t have any role in the group, sued in February 2012, claiming they were entitled to additional stakes. Three other relatives also sued.
The five plaintiffs will decide if they will appeal after reviewing the ruling, their lawyer, Cha Dong Eon, said.
Yun Jae Yun, a lawyer for Chairman Lee, said the judge’s decision was reasonable. Lee had said before the ruling he wouldn’t give a “dime” to his relatives because inheritance matters had been settled by his father, and he would appeal a loss, according to media reports.
Samsung Group said it had no comment on the ruling.
Handing over the shares to his siblings would have meant the chairman no longer would be the largest investor in Samsung Life. In South Korea’s complex world of cross-holding of shares in companies, that could have triggered a dispute over control of Samsung Electronics, Chae Yi Bai, a researcher at the Center for Good Corporate Governance, a Seoul-based private institute monitoring South Korean conglomerates, said before the ruling.
Samsung shares advanced about 34 percent in the past 12 months and reached a record 1,576,000 won on Jan. 2 as the company’s Galaxy smartphones extended their sales lead over Apple’s iPhone in the $219 billion global market.
The company currently is valued at $195 billion, making it the world’s 23rd-largest, according to data compiled by Bloomberg.
Chairman Lee holds 41.5 million shares, or about 21 percent, of Samsung Life, making him the largest shareholder, according to data compiled by Bloomberg. The elder brother wanted at least 9.65 million shares and the sister wants 2.6 million shares.
The public holdings of South Korea’s richest man are valued at $11.2 billion, according to data compiled by Bloomberg. The family conglomerate, Samsung Group, controls more than 80 companies making armored vehicles and artillery guns for South Korea’s military, oil tankers, amusement parks and apartment complexes.
Samsung Electronics accounted for 44 percent of Samsung Group’s total revenue in 2011. The group generates about 20 percent of South Korea’s gross domestic product.
Lee Byung Chul founded what is today South Korea’s biggest business group in 1938 and died in 1987 without leaving a will. Lee Kun Hee transformed the dried-fish and produce company into the world’s biggest maker of TVs, mobile phones and computer-memory chips.
The chairman’s lawyer said the family patriarch repeatedly expressed his desire for Lee Kun Hee to take over the group.
The dispute dragged Lee Kun Hee, a lung cancer survivor, back into a courtroom following a series of run-ins with the law. He was convicted of paying bribes to former Presidents Chun Doo Hwan and Roh Tae Woo in 1996 before receiving a pardon from then-President Kim Young Sam a year later.
Lee quit as chairman of the group and electronics company in 2008 after being charged with tax evasion. He received another presidential pardon in 2009 and reassumed his post running Samsung Electronics in 2010.
In December, he promoted his son, Lee Jae Yong, to vice chairman of Samsung Electronics, putting him a step closer to succession.
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