The Korea Herald


Samsung's financial units to sell off Electronics shares on breach woes

By Son Ji-hyoung

Published : May 30, 2018 - 18:17

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Two financial units under the Samsung conglomerate -- Samsung Life Insurance and Samsung Fire & Marine Insurance -- unveiled plans Wednesday to sell off their Samsung Electronics shares by Thursday.

(Yonhap) (Yonhap)
Samsung Life Insurance, holding 8.23 percent of Samsung Electronics as of Wednesday, will sell off some 23 million shares worth 1.2 trillion won ($1.1 billion), so that its ownership ratio will decrease to 7.92 percent, its regulatory filing showed.

Also, Samsung Fire & Marine Insurance will sell off some 4 million shares, worth 206 billion won. As a result, Samsung Fire & Marine Insurance will hold 1.38 percent of Samsung Electronics, down 0.07 percentage point from the Wednesday ratio.

Samsung Electronics is the crown jewel of South Korea’s largest conglomerate that owns insurer units, a brokerage, an engineering unit, a shipbuilder and an advertisement agency, among others.

Sales of the shares are poised to be arranged Thursday prior to trading hours in Korea -- from 9 a.m. to 3:30 p.m. The deal will be undertaken by Goldman Sachs Asia LLC and JP Morgan Securities Far East.

The two companies cited a need to comply with the Act on the Structural Improvement of the Financial Industry, under the authority of Korea’s financial regulator, the Financial Services Commission.

According to the law, financial units under a conglomerate are prohibited from holding over a combined 10 percent of shares in nonfinancial units.

If Samsung Electronics completes retiring its treasury shares -- worth some 49 trillion won -- as planned, Samsung Life Insurance’s equity ratio will shoot up to 8.9 percent. If combined with equities owned by Samsung Fire & Marine Insurance, the two financial firms’ ownership will top 10 percent.

The sell-off is expected to be a “pre-emptive measure against the forthcoming Electronics stock cancellation,” a Samsung Life Insurance official told The Korea Herald.

The move cames in sync with FSC Chairman Choi Jong-ku’s remarks earlier in May that the insurance firms holding stakes in Electronics firm would be subject to market volatility.

Samsung Life Insurance, however, will be subject to additional sell-off pressure. If a pending bill to revise the Insurance Business passes the parliament, the insurance firm will be barred from owning Electronics stock in excess of 3 percent in market value.

By Son Ji-hyoung