Samsung files IPOs as Lee family revamps chaebol

A sales assistant uses her mobile phone next to the company logos of Apple and Samsung at a store in Hefei, Anhui province. Samsung Group said it has filed to raise as much as $2.5bn in separate initial public offerings.

Bloomberg

Seoul

Samsung Group filed to raise as much as 2.68tn won ($2.5bn) in separate initial public offerings as the Lee family restructures ownership of South Korea’s largest conglomerate.

Cheil Industries Inc., the de facto holding company, filed for a 1.52tn won IPO, the company said yesterday. Samsung SDS Co., a provider of technology services, priced shares for its 1.16tn won offer at the top of the marketed range.

Samsung Group is revamping an empire spanning smartphones and televisions to insurance and construction. The moves may help heir apparent Lee Jae Yong retain control of crown jewel Samsung Electronics Co. after his 72-year-old father Lee Kun Hee was hospitalised following a heart attack.

“The IPOs will help Samsung’s third generation, including Lee Jae Yong,” said Heo Pil Seok, chief executive officer at Midas International Asset Management, which oversees $10bn, including Samsung Electronics shares. “The listings of Cheil and SDS is a signal that there will be a change in the group’s structure.”

Political pressure is mounting on Samsung to unwind a web of cross-shareholdings that allows the Lee family to maintain control of about 70 companies with less than a 2% total stake.

President Park Geun Hye’s government has banned the creation of new cross-shareholdings and offered tax breaks for restructuring as part of measures to improve corporate governance and make the family-run chaebol business groups more transparent.

In order to take control of Samsung Group, Lee’s three heirs face inheritance taxes that could exceed $5bn for their father’s $12.2bn fortune.

Lee Jae Yong owns more than 11% of Samsung SDS and is the largest shareholder of Cheil with a 25% stake.

Cheil, formerly known as Samsung Everland Inc., said in June it was seeking to go public to help overseas expansion and improve management transparency. The company sits atop the group via direct and indirect stakes in affiliates including Samsung Electronics and Samsung Life Insurance Co.

The theme park operator will sell shares in the range of 45,000 won to 53,000 won, according to a prospectus filed with South Korean regulators. SDS stock will be sold at 190,000 won apiece after being marketed in a range of 150,000 won to 190,000 won.

Samsung Electronics may accelerate a push into wearable devices and home appliances that communicate wirelessly after its third-quarter operating profit plunged 60% because of stagnating smartphone sales. Samsung will spend 15.6tn won building a semiconductor plant in South Korea to meet demand for the brains that run smartwatches, fitness monitors, automobiles and refrigerators.