Samsung Life to Buy Card Affiliate Stake, Lee Tightens Grip

  • Deal adds Samsung Electronics' entire stake in card business
  • The deal could pave way for creating a financial holding co.

Samsung Life Insurance Co. agreed to spend 1.54 trillion won ($1.27 billion) buying a stake in a credit card affiliate in the latest move by the heir apparent of South Korea’s biggest conglomerate to solidify family control.

The shares in Samsung Card Co. will be acquired from Samsung Electronics Co. for 35,500 won apiece, according to a filing Thursday. The insurer’s stake will add 43.4 million shares and increase its holding to 71.9 percent.

Lee Jae Yong, the third-generation leader of Samsung Group, has already engineered mergers, initial public offerings and the sell-off of parts of the chaebol. The insurer said Thursday’s agreement is aimed at securing stable investment returns while Samsung’s electronics unit plans to spend the proceeds on new businesses.

“Samsung Group is laying the groundwork for the Lees to have a greater control
over the group by aligning the business structure,” said Lee Sang Hun, an analyst at HI Investment & Securities Co. in Seoul. Samsung C&T Corp., the de facto holding company, “will sit on top of that well-aligned businesses eventually, which would help Lee Jae Yong strengthening his power.”

Samsung Shuffle

In September, Samsung Group completed a merger of its de-facto holding company Cheil Industries Inc. and Samsung C&T. The deal helped the founding Lee family cement control by allowing the group to strengthen its cross-ownership structure since the merged affiliates had stakes in other companies.

The purchase is positive for Samsung Card’s shareholder value and may lay the groundwork for Samsung Life to become a financial holding company, Daishin Securities Co. analyst Choi Jung Wook wrote in a note Thursday. It will also dispel rumors that Samsung Group may sell a stake in Samsung Card, he said.

Samsung Life will become the largest shareholder of Samsung’s financial units after the purchase. The life insurance company holds 97.71 percent stake in Samsung Asset Management Co., 14.98 percent stake in Samsung Fire & Marine Insurance Co. and 11.4 percent stake in Samsung Securities Co., according to data compiled by Bloomberg. Samsung Futures Inc. is owned by Samsung Securities.

Separately, Lee is seeking to sell a 2.05 percent stake or 1.587 million shares of IT consultancy Samsung SDS Co. worth about 380 billion won, the parent group said in an e-mailed statement Thursday. That would help him secure funds to buy shares of Samsung Engineering Co. in case its ongoing rights offering isn’t fully subscribed, according to the e-mail.

Lee currently owns 11.25 percent of Samsung SDS, according to data compiled by Bloomberg.

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