Shareholders Dissatisfied as Stock Price Stays Below 190,000 Won for Over 3 Years 5 Months
Samsung Owner Family's Inheritance Tax Payment Method... President Lee Boo-jin Sells Entire Stake
Samsung SDS, which has been listed on the stock market for a full 9 years this year, has been struggling with a low stock price that has failed to reach its initial public offering (IPO) price for several years. Recently, when news broke that Lee Boo-jin, President of Hotel Shilla, would sell all her shares to pay inheritance tax, the stock price dropped again without resistance. Among shareholders, complaints have erupted about the Samsung owner's family being an 'inheritance tax wallet.'
According to the Korea Exchange on the 8th, Samsung SDS's stock price closed at 137,200 won the previous day. Since June 16, 2021 (191,000 won), the closing price has not exceeded the IPO price of 190,000 won from 9 years ago for more than 3 years and 5 months. On October 11 last year, the stock price fell to 113,000 won, marking an all-time low. Even on the 6th, when the KOSPI surged 5.66% in one day due to the full ban on short selling, so-called 'bull market' conditions, SDS's stock price fell by 1.31%. Shareholders' accumulated dissatisfaction over the years also exploded. The background of the stock price slump is believed to be related to the Samsung family's inheritance tax issue.
After the death of the late Lee Kun-hee, the former chairman, in October 2020, the bereaved family has been paying inheritance tax in installments over six payments for five years starting from April 2021, utilizing the installment payment system. The payment is scheduled to end in April 2026. To do this, collateral must be provided to the tax authorities, and Samsung Electronics Chairman Lee Jae-yong pledged 7,116,555 shares (9.20%) of Samsung SDS stock he owns as collateral to the Seoul Western District Court in April 2021.
Since the inheritance tax amounts to 12 trillion won, it was anticipated early on that the bereaved family would sell affiliate shares to raise funds. In fact, the disposal of SDS shares has been steadily carried out. Lee Seo-hyun, Chairperson of the Samsung Welfare Foundation, and Lee Boo-jin sold half of the SDS shares they each inherited, totaling 3,021,014 shares (3.90%), through block deals in March last year. Although this was an expected step, the stock price plunged about 7% in one day, causing volatility. Subsequently, in February this year, Chairperson Lee Seo-hyun signed a trust contract to dispose of her remaining shares (1.95%), and on the 3rd of this month, President Lee Boo-jin also proceeded with disposal in the same manner. As a result, the two sisters have effectively sold all their SDS shares.
The remaining shares are those pledged to the court by Chairman Lee Jae-yong and a small amount (3,233 shares, 0.00% stake) held by Hong Ra-hee. Shareholders are concerned and raising the possibility that Chairman Lee may also sell SDS shares to secure funds for inheritance tax payments. SDS has grown without a single deficit over the past 9 years. However, the underlying 'owner risk' cannot be ruled out as a reason for the persistent decline in stock price. Kim Dong-yang, a researcher at NH Investment & Securities, said, "Despite difficult business conditions, Samsung SDS is expected to improve performance from next year onward through expansion of cloud and digital forwarding services (Cello Square)," but cited the 'overhang issue (potential selling pressure) due to the controlling shareholder family's need to prepare inheritance tax funds' as a downward factor for the stock price.
On November 14, 2014, at the Korea Exchange Seoul Headquarters PR Center, (from the front row, left) Choi Kyung-soo, former Chairman of the Korea Exchange, and Jeon Dong-soo, former CEO of Samsung SDS, are smiling as they look at the stock prices displayed on the trading terminal after the listing ceremony. (Photo by Korea Exchange)
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