Lee’s death sparks hope for Samsung shake-up, dividends

Newspapers reporting the death of Samsung Electronics chairman Lee Kun-Hee are displayed on a street in Seoul. Lee transformed the small television maker into a global giant of electronics. (AP)
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Updated 26 October 2020

Lee’s death sparks hope for Samsung shake-up, dividends

  • Shares in the company and affiliates rise; around $9bn in tax estimated for stockholdings alone

SEOUL: Shares in Samsung Electronics Co. Ltd. and affiliates rose on Monday after the death a day earlier of Chairman Lee Kun-hee sparked hopes for stake sales, higher dividends and long-awaited restructuring, analysts said.

Investors are betting that the imperatives of maintaining Lee family control and paying inheritance tax — estimated at about 10 trillion won ($8.9 billion) for listed stockholdings alone — will be the catalyst for change, although analysts are divided on what form that change will take.

Shares in Samsung C&T and Samsung Life Insurance closed up 13.5 percent at a two-month high and 3.8 percent, respectively, while shares in Samsung SDS also rose. Samsung Electronics — the jewel in the group’s crown — finished 0.3 percent higher.

Son and heir apparent Jay Y. Lee has a 17.3 percent stake in Samsung C&T, the de facto holding firm, while the late Lee was the top shareholder of Samsung Life with 20.76 percent stake.

“The inheritance tax is outrageous, so family members might have no choice but to sell stakes in some non-core firms” such as Samsung Life, said NH Investment Securities analyst Kim Dong-yang.

“It may be likely for Samsung C&T to consider increasing dividends for the family to cover such a high inheritance tax,” KB Securities analyst Jeong Dong-ik said. Lee, 78, died on Sunday, six years after he was hospitalized due to heart attack in 2014. Since then, Samsung carried out a flurry of stake sales and restructuring to streamline the sprawling conglomerate and cement the junior Lee’s control.

Investors have long anticipated a further shake-up in the event of Lee’s death, hoping for gains from restructuring to strengthen de facto holding company Samsung C&T’s control of Samsung Electronics, such as Samsung C&T buying an affiliate’s stake in the tech giant.

“At this point, it is difficult to expect when Samsung Group will kick off with a restructuring process as Jay Y. Lee is still facing trials, making it difficult for the group’s management to begin organizational changes,” Jeong said.

Lee is in two trials for suspected accounting fraud and stock price manipulation, as well as for his role in a bribery scandal that triggered the impeachment of former South Korean President Park Geun-hye. The second trial resumed hearings on Monday.

Lee did not attend the trial on Monday, as Samsung executives joined other business and political leaders for the second day of funeral services for his father.


Dubai builder Arabtec to file application for insolvent liquidation

Updated 41 min 43 sec ago

Dubai builder Arabtec to file application for insolvent liquidation

  • Board conclude that it is no longer tenable for the company to continue operating outside of a formal insolvency process
  • The court application will also request a number of other companies in the group be placed into insolvent liquidation at the same time

DUBAI: UAE Builder Arabtec Holding confirmed at a general assembly meeting on Monday it will, at the earliest opportunity, file an application for its insolvent liquidation at the courts.

“In accordance with the resolution of the company’s shareholders at the general assembly meeting held on Sept. 30, 2020, the conclusion was reached following a two-month period of discussions with key stakeholders,” state news agency WAM reported.

“The Board has concluded that it is no longer tenable for the company to continue operating outside of a formal insolvency process and that it is in the best interests of the company’s stakeholders that the company be placed into an insolvent liquidation (subject to court approval) at the earliest opportunity,” the report added.

The court application will also request that Arabtec Construction LLC, Arabtec Constructions LLC, Austrian Arabian Readymix Concrete Co LLC and Arabtec Precast LLC (collectively the Impacted Companies) will also be placed into insolvent liquidation at the same time.

No application has been made with regards to other subsidiaries and the builder intends to continue to engage with stakeholders to explore options open to it, the report added.