Cheil Falls on Report Samsung Drops Holding Company Plan

Cheil Industries Inc., a resort operator with investments in many Samsung Group affiliates, fell the most in four months in Seoul trading Thursday after a report that the Samsung Group had decided not to form a holding company.

Cheil slumped 11 percent, the most since Jan. 5, to 142,500 won at the close of trading in Seoul.

Samsung, South Korea’s biggest industrial conglomerate, is revamping its ownership structure, prompting speculation that Cheil would become a holding company for most of the group’s 67 affiliates. Samsung decided against forming a holding company after a study determined the expense would outweigh the benefits, Korea Economic Daily reported today, citing a Samsung official it didn’t identify.

“The market has been giving Cheil a premium of becoming holding company without any clear ground,” said Park Joong Sun, an analyst at Kiwoom Securities Co. “The report that Samsung Group will not turn to a holding company structure dashes investors’ speculation.”

In an e-mailed statement, Samsung Group declined to comment on the Korea Economic Daily report.

Samsung has accelerated its restructuring since Lee Kun Hee, head of the founding family, was hospitalized from a heart attack in May last year.

The stock trades at about 96 times of 12-month projected earnings, compared with 11 times for the benchmark Kospi index and 8.7 times for Samsung Electronics Co.

Samsung Electronics, Cheil and Samsung SDS account for about 20 percent of South Korea’s $1.2 trillion stock-market capitalization.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE