SEOUL – Shares of Samsung Electronics Co Ltd and its subsidiaries rose on Monday after the death of President Lee Kun-hee earlier in the day, sparking hopes for a restructuring and sell-off, analysts said.
Investors are betting that such measures would be required to pay a heavy inheritance tax, estimated at about 10 trillion won ($ 8.9 billion) per share, although analysts were divided over what the moves were.
Shares of Samsung C&T and Samsung Life Insurance rose 21.2% and 15.7% respectively, while shares of Samsung BioLogics, Samsung SDS and Samsung Engineering also rose.
“Inheritance tax is outrageous, so family members may have no choice but to sell shares in some non-core companies, such as Samsung Life,” said NH Investment Securities analyst Kim Dong-yang.
Investors have long expected a turmoil in the event of Lee’s death, hoping that gains from any restructuring will strengthen the de facto corporate portfolio of control of Samsung C&T by Samsung Electronics jewelry, such as Samsung C&T, which is buying the stake. of a subsidiary to the technology giant.
Son and heir Jay Y. Lee holds a 17.3% stake in Samsung C&T, which holds a 5.01% stake in Samsung Electronics, the world leader in smartphones and memory chips. Samsung C&T also has a 19.3% stake in Samsung Life, the No. 2 shareholder in Samsung Electronics.
“At this point, it is difficult to wait for the Samsung Group to embark on a restructuring process, as Jay Y. Lee continues to face trials, making it difficult for the group’s management to initiate organizational change,” said KB Securities analyst Jeong Dong-ik said.
Lee is facing two separate trials for suspected accounting fraud and stock price manipulation linked to the 2015 merger and his role in a bribery scandal that sparked the ouster of former South Korean President Park Geun-hye.
Lee’s father was the richest shareholder in South Korea, with holdings of 4.18% of Samsung Electronics and 0.08% of the preferred stock worth about $ 15 trillion ($ 13.3 billion). in total.
It also held a 20.76% stake in Samsung Life worth about 2.6 trillion won, and a 2.88% stake in Samsung C&T worth about 564 billion won since Friday’s close.