Samsung heiresses sell subsidiary shares to pay inheritance tax

Hotel Shilla CEO Lee Boo-jin, left, and Samsung Welfare Foundation director Lee Seo-hyun / Courtesy of each company

By Anna J. Park

Samsung Group heiresses reportedly began selling part of their stakes in Samsung SDS to fund the payment of a huge inheritance tax. Investors are paying keen attention to the move by the bereaved family of late Samsung Group Chairman Lee Kun-hee as the sell-off can put downward pressure on stock prices.

According to the financial industry, Morgan Stanley and KB Securities sold some 3 million shares of Samsung SDS as a block deal trade on Monday afternoon, after the closing of the day's regular trading session.

Market watchers presumed the stocks came from Hotel Shilla CEO Lee Boo-jin, the eldest daughter of late tycoon, and Samsung Welfare Foundation director Lee Seo-hyun, his second daughter.

The combined 3.9 percent stake in Samsung SDS is known to have been sold at an 8.8 percent discount rate per share from the closing price of Monday.

Since October 2020 when the late chairman passed away, the two daughters signed a contract with KB Kookmin Bank, asking the financial company to take charge of selling their 3 million shares by April 25.

Due to the block deal, prices of Samsung SDS shares fell by 7.14 percent on Tuesday. Yet the price rose again by 2.69 percent at Wednesday's close, as the stock now faces a lighter burden from overhang issues.

Some 19.94 million shares ― or a 0.33 percent stake in Samsung Electronics owned by Hong Ra-hee, the widow of the late tycoon ― were also sold in a similar block deal on Wednesday after the closing of regular trading sessions.

The shares were sold at 68,000 won per share, which applied the discount rate of 2.4 percent from the previous trading session's closing price of 70,500 won. A few major global institutional investors are known to have purchased the stocks. With the block deal, Hong is estimated to have secured over 1.3 trillion won in liquidity.

The total amount of inheritance taxes imposed on the family members is estimated to be over 12 trillion won. And 11 trillion won of the tax is levied on the family for inheriting the late chairman's stocks in Samsung subsidiaries, ranging from Samsung Electronics, Samsung Life, Samsung C&T to Samsung SDS.

In December last year, Lee Seo-hyun also sold a 1.73 percent stake in Samsung Life, which is half of her 3.46 percent stake in the insurance affiliate.

As the family decided to pay the tax in installments over five years, market watchers expect more block deal sales to take place.