Never forget: Samsung is a family business. Before the hospitalisation last month of chairman Lee Kun-hee, restructuring news about the group was already trickling out. Since then, the trickle has become a flood. On Tuesday, Samsung Everland announced listing plans while Samsung Electronics completed the purchase of shares in associates Cheil Industries and Samsung SDI, siblings which merged this year.
Reorganising Korea’s unwieldy chaebol, or conglomerates, is nothing new. The late-1990s Asian financial crisis pushed the chaebol to put their houses in order. But investors still await greater sway over management and investor-friendly uses of surplus cash to drive valuations towards those of international peers (Samsung trades at eight times forward earnings).
“Restructuring” might imply that Samsung’s structure will become cleaner. That is unlikely. The share purchases, as well as the proposed listings of Samsung SDS (technology logistics) and Samsung Everland (construction, golf courses, fashion), are about the family. As one Korean broker delicately puts it, “capital raised . . . will probably be used to pay inheritance tax or strengthen ownership of affiliates over which the family needs to gain greater control”. (The broker rates Samsung Electronics a buy, of course).