Jay Y. Lee will buy 7,188,793 Samsung Electronics common shares from his mother, Hong Ra-hee, for 1.9374 trillion won ($1.4 billion) in an off-market transaction.
Samsung Electronics disclosed the planned transaction in a regulatory filing on the 9th. Lee will pay 269,500 won per share, with the transaction price based on the company’s closing price on the 8th, the last business day before the filing. The shares represent about 0.11% of Samsung Electronics.
The direct transfer will keep the shares within the controlling family rather than introducing them into public-market supply. About 1.94 trillion won worth of Samsung Electronics shares will not come onto the market through the transaction.
The purchase will increase Lee’s holding in Samsung Electronics to 1.58% from 1.47%, based on total shares issued including common and preferred stock. Analysts consider the effect on Samsung’s governance structure limited because the stake to be acquired amounts to only 0.11%.
The financing context stems from the inheritance-tax obligations faced by the Samsung family following the death of former Samsung Chairman Lee Kun-hee in October 2020. The inheritance tax imposed on his heirs exceeded 12 trillion won. The family chose to pay it in six installments over five years beginning in 2021 under a deferred payment plan.
Funding those payments involved both disposals of shares in affiliates and borrowing from financial firms against shareholdings. Hong also took out loans secured against her Samsung Electronics shares to raise funds for the inheritance tax. Although the tax payments have been completed, borrowings incurred to fund them remain.
The specific purpose of Hong’s planned share sale was not disclosed. Business circles believe the transaction would provide cash to repay loans from financial institutions incurred during the inheritance-tax funding process.
Hong’s previous Samsung Electronics disposals used a different structure. In March 2022, she sold 19,941,860 shares, representing a 0.33% stake, through a block sale that raised 1.372 trillion won. The sale price was a 2.4% discount to the previous day’s close. Samsung Electronics shares fell 0.99% on the day of the block sale, dropping below 70,000 won.
A further block sale followed in April this year, when Hong sold 15 million Samsung Electronics shares, or 0.25%, raising about 3.08 trillion won. The sale price was 2.5% below the previous day’s close. That transaction effectively completed the Samsung family’s payment of the roughly 12 trillion won inheritance-tax bill it had been settling since 2021.
The planned transaction differs from those earlier sales because the Samsung Electronics stake will be transferred directly within the controlling family rather than placed with outside investors. It will provide Hong with cash while increasing Lee’s holding, while business circles believe the proceeds could be used to repay borrowings incurred during the inheritance-tax payments.
