April 26, 2024

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[THE INVESTOR] Samsung Electronics on Nov. 29 ruled out the possibility of a merger with Samsung C&T, the de facto holding company of Samsung Group, after its possible split-off into holding and operating companies.

“We have no immediate plan for the merger of Samsung Electronics’ holding company and Samsung C&T,” said Lee Sang-hoon, the company’s chief financial officer, during a conference call.

“For now, we are reviewing the proposal to set up a holding company.”

Since the controversial merger between Samsung C&T and Cheil Industries last year, there is speculation that the new entity could be merged with Samsung Electronics’ holding company.

US activist hedge fund Elliott Management also urged Samsung to do so in its recent proposals asking for more shareholder benefits.

Samsung Electronics Vice Chairman Lee Jae-yong and the owner family members who have raised their stake in Samsung C&T are also expected to benefit from the possible merger that would help them secure more stake in Samsung Electronics, the group’s crown jewel, to wield more power across other affiliates.

The heir apparent, together with his father, the ailing Samsung patriarch Lee Kun-hee, owns less than 4 percent stake in the company. The combined favorable stake, including those owned by other Samsung companies, is estimated to be about 18 percent.

The merger denial, industry watchers say, could have considered the snowballing influence-peddling scandal involving President Park Geun-hye.

Prosecutors are investigating whether the president and her close aides have pressured the state-run National Pension Service, the largest shareholder of the then Samsung C&T whose support played a key role for the deal to get shareholders’ approval.

By Lee Ji-yoon (jylee@heraldcorp.com)