Samsung faces new pressure on group structure after criticism by antitrust head (updated)

Samsung Life Insurance

10/05/2018 06:46

* Antitrust chief says urges Samsung heir Lee to ease
ownership
structure 
    * Samsung Life must consider cutting Samsung Elec
stake-regulator 

 (Adds background, context)
    By Heekyong Yang and Yuna Park
    SEOUL, May 10 (Reuters) - South Korea's biggest
conglomerate, Samsung Group  SAGR.UL , came for fresh criticism
about its ownership structure on Thursday, with the country's
antitrust chief saying it was unsustainable.
    Korea Fair Trade Commission chief Kim Sang-jo took aim at
the group's circular shareholdings between companies such as
Samsung C&T  028260.KS , Samsung Life Insurance  032830.KS , and
Samsung Electronics  005930.KS .
    The structure has enabled the family of Samsung heir Jay Y.
Lee to retain control of the companies in the conglomerate,
especially crown jewel Samsung Electronics, with minimum
investments, critics have said.
    "The clear fact is, the current ownership and control
structure of Samsung Group, which goes from Vice Chairman Jay Y.
Lee to Samsung C&T to Samsung Life Insurance to Samsung
Electronics, is not sustainable," Kim told reporters on the
sidelines of a meeting with business leaders.
    Samsung Group's complex ownership structure has come for
criticism earlier too, most notably from U.S. activist hedge
fund Elliott Management, which proposed as a solution in 2016
that Samsung Electronics split itself into two.
    Samsung Electronics rejected that proposal but accepted part
of the fund's proposals by announcing plans to cancel its
existing treasury shares worth over $35 billion by 2018.
 urn:newsml:reuters.com:*:nL3N1HM1C4
    Fair Trade Commission's Kim said he urges Jay Y. Lee to make
a decision concerning the ownership structure, adding that
Samsung Electronics Vice Chairman Yoon Boo-keun, who attended
the meeting, had told him it will be considered.
    A Samsung Electronics spokesman did not have an immediate
comment. 
    Others have also questioned the group's ownership structure
recently.
    The country's top financial regulator said on Wednesday that
Samsung Life Insurance must consider ways to lessen the risk of
having too much of its assets concentrated in one place,
including selling some or all of Samsung Life's stake in Samsung
Electronics. 
    "Lessening the risk of concentrated assets is key to
securing financial stability, which is what we are interested
in," said Choi Jong-ku, Chairman of the Financial Services
Commission. 
    "If there are any concerns about retaining management
control (of Samsung Electronics) we are saying, look for ways to
keep it while lessening the risk." 
    Samsung Life Insurance is at the heart of a
cross-shareholding structure in which it owns about 8 percent of
Samsung Electronics, which has a market value of about $340
billion, according to Thomson Reuters data.  urn:newsml:reuters.com:*:nL3N1RX3SB
($1 = 1,072.8000 won)

 (Reporting by Heekyong Yang and Yuna Park; Additional reporting
and writing by Joyce Lee; Editing by Muralikumar Anantharaman)
 ((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net))