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Samsung Group Shares Jump on Speculation Over Dividend Increases

Shares of companies that are part of the Samsung Group climbed amid speculation the family-controlled conglomerate may raise dividends at some units following the death of Chairman Lee Kun-hee, to help his heirs raise funds to pay the inheritance tax.
Samsung Billionaire Jay Y. Lee Apologizes for Company's Past Wrongdoings Jay Y. Lee, co-vice chairman of Samsung Electronics Co. on May 6. Photographer: SeongJoon Cho/Bloomberg
Bloomberg
By Bloomberg
26 Oct 2020
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Samsung C&T Corp. surged as much as 21%, the most since 2014. Jay. Y Lee, the first son, holds a large stake in the de facto holding company of South Korea’s largest conglomerate. Samsung Life Insurance Co. and Samsung SDS Co. rallied as much as 16% and 10%, respectively.

Lee Kun-hee’s heirs are estimated to have to pay about 10.9 trillion won ($9.66 billion) in inheritance tax, according to a note from Korea Investment & Securities. Samsung Life may raise dividends considering that it holds stakes in Samsung Group financial units that are generating solid profits, according to Jongwoo Yoo, an analyst at Korea Investment.

READ: Lee Kun-hee, Korean Icon Who Transformed Samsung, Dies at 78

Shares of Samsung C&T surge the most intraday since 2014

While dividend hikes alone may not be enough for the family to foot the tax bill, they are “a rational way to raise cash,” according to Jeon Kyung-Dae, chief investment officer for equities at Macquarie Investment Management Korea.

“It needs to be seen whether the units have the capacity to raise payouts,” he said. “The deceased chairman had been hospitalized for a long time, so the Samsung Group must have prepared a plan for succession.”

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