Samsung restructuring likely owing to chairman's illness

Investors sense that the health problems of Samsung Electronics chairman Lee Kun-hee will result in a restructuring of the family’s complex holdings,

the

Wall Street Journal

reported.

The company’s shares rose on the news that Lee was hospitalized for a heart attack, the article said.

The family owns dozens of entities, 17 of which are listed, the report noted. “While the complexity of realigning all this present risks, canny investors can benefit from likely buybacks and the boost to valuation multiples as a simpler structure emerges,” the article said.

A 50% inheritance tax for Mr. Lee’s heirs, and a loose grip by the family on crown jewel Samsung Electronics, are likely hastening preparations. So is government pressure to untie the circular shareholdings that help families keep control over South Korea’s biggest conglomerates, or “chaebol.”

The Lee family needs to raise money to pay inheritance taxes, the

Journal

report noted. The family directly owns only 4.7% of Samsung Electronics. Samsung Life Insurance holds 7.6%, and two other affiliated companies hold 5.3%. Samsung Electronics also holds an 11% stake in itself via treasury shares, the

Journal

article said. (Source:

Wall Street Journal,

June 16, 2014.)