Slowdown of Succession Process
Samsung Electronics is denying the rumors about the company’s likely merger with Samsung SDS. Accordingly, many suspect that the company will attempt to slow down the succession and reshuffling process, which has taken place since the hospitalization of Chairman Lee Gun-hee last year.
Lee Myung-jin, IR managing director of Samsung Electronics, said at the 2015 Investor Forum held in Shilla Hotel, Seoul on June 3, “The company has no plan for a merger with Samsung SDS,” adding, “Although the announcement could not clear away all the rumors out there, we hope it can convey the company’s position.”
This is the first time that the company provides its official position regarding the merger on the level of the group.
Samsung Group has maintained so far a strategy of “neither confirm nor deny” in the official position, as far as the management succession is concerned. The company seems to judge that it may bring strategic advantages for the company to leave any future scenario open, whatever decision it would make in the future. However, with a clear denial made by IR director Lee in the IR briefing session, many suspect the company has finished up the first phase of Vice Chairman Lee Jae-yong’s succession process.
While the vice chairman Lee holds a 11.25 percent stake in Samsung SDS, he has almost “nothing” in Samsung Electronics. This led to numerous speculations that the son of Chairman Lee Gun-hee would increase his shares in Samsung Electronics through a merger with Samsung SDS.
“Given the official denial by Samsung for a merger between Samsung Electronics and SDS, it is likely that the vice chairman will sell his SDS shares in the future to use the money to pay the gift tax that will occur when he inherits the shares of Chairman Lee,” an insider of the business community, adding, “The money could be also used in many ways even when establishing a holding company.”
Some raise the view that the Samsung Group will, for the time being, focus on consolidating internal stability rather than reshuffling of organizations with the recent merger between Samsung Cheil Industries and Samsung C&T.