Samsung’s Lee buys 200 billion won of two affiliates

Lee Jae-yong, Samsung Electronics vice chairman has bought 200 billion won ($160 million) worth of stocks in two Samsung affiliates.

According to the company, Lee on Thursday bought 1.3 million shares of Samsung C&T from the total five million shares that Samsung SDI was selling. The 1.3 million shares are worth about 200 billion won. The move increases Lee’s ownership stake in the company from 16.5 percent to 17.2 percent. Lee also bought three million shares, worth 30.2 billion won, of Samsung Engineering’s own shares. The vice chairman is believed to be considering an additional purchase worth 70 billion won of the engineering company’s stock.

“Vice Chairman Lee decided to purchase part of Samsung C&T’s shares to minimize the burden of a large amount of shares up for sale as a process in resolving the cross-shareholding [governance] structure, while trying to minimize the impact on minority stakeholders,” a Samsung official said.

The Fair Trade Commission ordered Samsung Group to sell five million shares worth about 730 billion won owned by Samsung SDI, as the cross-shareholding structure within Samsung Group has intensified as a result of the merger between Cheil Industries and Samsung C&T late last year.

As well as Lee, Samsung Foundation also bought 300 billion won worth of Samsung C&T from Samsung SDI.

Samsung said the foundation participated in the purchasing of Samsung’s de facto holding company as a long-term investment.

It is speculated that Lee and the foundation will be selling half of the combined 500 billion won in stocks it purchased on Thursday in the form of off-hours block trading.

Last month, Lee sold off 2.05 percent of the stake he had in Samsung SDS and secured funding worth 380 billion won.

Samsung at the time said Lee was planning to use the 300 billion won to buy Samsung Engineering’s newly issued shares if existing shareholders of the engineering company were willing to waive their rights to buy them first. However, 99.9 percent of the existing shareholders bought the newly issued shares, and Lee didn’t have to spend the 300 billion won.

With the recent moves, there is growing speculation that Samsung C&T will have more influence on the governance structure of the newly reorganized Samsung Group.

“The company that shows the biggest possibility of standing at the top among the affiliates once Samsung converts into a holding company governance structure is Samsung C&T,” said a business community insider who requested anonymity.

BY PARK TAE-HEE, SOHN HAE-YONG [lee.hojeong@joongang.co.kr]