Shinsegae vice chairman Chung Yong-jin returned to the media spotlight last week when a local newspaper revealed that he sold 48,500 shares of Samsung Electronics ― valued at around 59.1 billion won ($54.1 million) ― late last year.
The deal reduced the number of Chung’s shares in Korea’s largest tech company to 245,000 from 293,500, reported as of September 2014.
According to reports, Chung holds a 0.17 percent stake in Samsung Electronics, which makes him the fourth-largest individual shareholder of the company, following Samsung chairman Lee Kun-hee, Lee’s wife Hong Ra-hee and their son and Samsung vice chairman Jay-yong.
The 46-year-old Chung has a substantial stake in the company because he related to the Samsung founders ― his mother Lee Myung-hee is the chairman’s younger sister. Shinsegae used to be a part of Samsung Group until 1997, when the sister branched out independently to establish the country’s 13th-largest business conglomerate by assets. Both mother and son are thought to have received their shares in Samsung in advance.
Chung’s possession of Samsung shares was made public in 2011 when Samsung Electronics unveiled some of the largest individual shareholders of the company for the “investors’ interest.” This was regarded as a sign that Samsung wasn’t very pleased with his stake in the company.
Chung’s decision to sell his shares was seen as a move to secure liquidity to prepare for his takeover as Shinsegae chairman. MoneyToday reported that he will need to pay 700 billion won-800 billion won in gift tax when his mothers’ wealth is transferred to him. His mother holds 1.7 million shares of Shinsegae and 4.82 million shares of E-Mart.
“Though Chung has worked as a de facto head of Shinsegae for about 10 years, the tax has always been an obstacle for him to fully control the company,” an industry insider said.
Another suggested that Chung may have felt the pressure to loosen ties with Samsung now that both groups are engaged in several turf wars.
Shinsegae in 2012 acquired Paradise Duty Free in order to jump into the duty-free industry, where Samsung’s leisure unit Hotel Shilla has a strong foothold. The two have locked horns in the bidding for Incheon International Airport duty-free zone, and are also expected to compete again for a license to start an urban duty-free store in Seoul in June. Hotel Shilla, led by the Samsung chairman’s eldest daughter Lee Boo-jin, has joined hands with archrival Hyundai’s Chung Mong-gyu to strengthen its chances in the competition, while Shinsegae Duty Free has been established as an independent corporation to consolidate its base.
In fact, during an unexpected encounter with the media in December, Chung abruptly told reporters that he would “sell Samsung shares,” though in February he stepped back and said he has no plans to do so.
“For the past decade, Shinsegae has been conveniently tagged as a ‘pan-Samsung’ company but as their business rivalry increases, Chung may have felt the need to let go of his ties with Samsung bit by bit,” a source said.
The Shinsegae spokesman declined to comment about Chung’s personal financial status.
By Bae Ji-sook (baejisook@heraldcorp.com)