Cheil denies Samsung to sell its shares in firmShares of Cheil Worldwide have been on a roller coaster ride for weeks as rumors resurfaced that Samsung Group is considering selling its shares in the nation’s largest advertising agency.
Cheil Worldwide denied the rumors and said nothing has been decided yet in response to the Korea Exchange’s inquiry notice request.
“We found out some of our major shareholders are negotiating multilaterally with foreign firms, but nothing has been confirmed,” a Cheil official said. “We will file an official document once everything becomes clear.”
Regardless of the company’s response, Cheil shares have continued to swing from positive to negative in past weeks. They plummeted 11.08 percent to 17,650 won ($14.39) on Wednesday from the previous day, but managed to bounce back to 17,950 won, up 1.70 percent, on Thursday.
The rumors said Samsung Group’s affiliates, including Samsung C&T and Samsung Electronics, the two largest shareholders of Cheil, plan to sell their 28.44 percent of Cheil shares to French ad giant Publicis Groupe.
The rumors spread after Bloomberg News reported last month that “Publicis is considering a tender offer for about a 30 percent stake in Seoul-based Cheil Worldwide, which would make it the single largest shareholder.”
Publicis Groupe-owned Starcom currently handles some of Samsung Electronics’ television advertising globally. Publicis first approached Samsung to show its interest in buying shares of Cheil, according to representatives of Samsung.
Publicis has struggled after its attempted merger with U.S.-based Omnicom Group failed in 2014. The group lost most of the North American media business to Procter & Gamble and L’Oreal.
“Cheil Worldwide is doing very well in China, while Publicis is really strong in Europe,” a Samsung representative said. “We are considering various things right now, such as joint management and corporate marketing, so that the two companies can benefit from each other and their strengths in those regions.”
Cheil Worldwide is the nation’s largest and the world’s 15th-largest advertising agency. It operates 49 offices in 42 countries and has nearly 6,000 employees around the world.
Cheil’s operating profit reached 948.7 billion won ($774.2 million) last year. Some 72 percent of it came from overseas, while 33 percent of total profit came from China.
“Samsung might sell Cheil’s foreign business portion while keeping local marketing and its sports teams,” a local investment bank insider said.
“The sale rumor has been around for a while, but nothing has been decided yet,” Cheil Worldwide CEO Lim Dai-ki told reporters at Samsung’s weekly meeting on Wednesday.
However, many believe the rumor is not totally off base, since Samsung Group has been restructuring its financial and electronics affiliates.
Lee Seo-hyun, who had been assuming double titles as president of management planning at Samsung C&T and head of management strategy at Cheil Worldwide, had her role changed to president of the fashion division at Samsung C&T in December. She is now expected to be solely devoted to the fashion business at the de facto holding company of Samsung Group.
BY PARK TAE-HEE, KOO HUI-LYUNG AND KIM YOUNG-NAM [firstname.lastname@example.org]