Jay Y. Lee tightens grip on Samsung with increased stake in key affiliate

Jay Y. Lee, the heir of Samsung Group, has bolstered his grip on South Korea’s largest conglomerate by inheriting half his late father’s stake in a key affiliate of the group – a move widely seen as confirming his ascension to Samsung’s top post.

Lee, currently the vice chairman of Samsung Electronics Co., increased his stake in Samsung Life Insurance Co., to 10.44% from a mere 0.06% by inheriting half the late Group Chairman Lee Kun-hee's 20.76% stake in the insurance firm.

Samsung Life plays a key role in controlling Samsung Electronics as its largest shareholder with an 8.51% stake.

The senior Lee’s two daughters -- Lee Boo-jin, chief executive of Hotel Shilla, and Lee Seo-hyun, chief of Samsung Welfare Foundation – inherited 6.92% and 3.46% of Samsung Life, respectively, while his wife Hong Ra-hee inherited none, according to the group’s regulatory filing on Apr. 30.

The late chairman’s stakes in Samsung C&T Co. and Samsung Electronics were split according to the inheritance ratio stipulated by the country’s law, with Jay Y. Lee and the two daughters receiving about 22% each of their father’s stakes and their mother receiving about 33%.

Following the inheritance, Jay Y. Lee’s stake in the electronics giant rises to 1.63% from the previous 0.7%, while his stake in Samsung C&T increases to 17.97% from 17.33%.

The de facto leader of Samsung Group is the largest shareholder of Samsung C&T, which in turn owns a 19.3% stake in Samsung Life in a circular ownership structure.

Analysts say the inheritance was carried out in a way to further cement Jay Y. Lee’s control over the conglomerate while preventing any family feud over how to split the inherited assets.

LEE BOO-JIN EMERGES AS SAMSUNG’S NO. 2

Market watchers also noted that Lee Boo-jin, the Hotel Shilla CEO and the eldest daughter of the late Lee, emerged as Samsung Group’s second-most important person by receiving 6.92% of Samsung Life.

The late Lee, who was Korea's richest man, died in October last year and left assets estimated to be worth more than 25 trillion won ($22.4 billion), including his stocks valued at around 19 trillion won.

The Lee family, including Jay Y. Lee, said on Wednesday that they will pay 12 trillion won in inheritance tax, the largest-ever in the country's history, in six installments over several years.

Separately, the Samsung Group heirs also said they will donate 2 trillion won worth of art from the collection they inherited from the late chairman, along with a contribution of 1 trillion won in cash to build Korea's first infectious disease center to treat rare disease patients.

Earlier on Friday, they paid their first installment of the inheritance tax.

Write to Shin-Young Park and Hyung-Suk Song at nyusos@hankyung.com
In-Soo Nam edited this article.