The family of the late Samsung Electronics Co Ltd (005930.KS) chairman Lee Kun-hee said on Wednesday she would pay more than 12 trillion won ($ 10.8 billion) in inheritance tax on her estate. and donate its vast private art collection to state curators.
Lee, who is credited with transforming Samsung into the world’s largest smartphone and memory chip maker, died on Oct. 25 with a local media domain valued at around 26 trillion won.
The inheritance tax bill – one of the largest on record in South Korea and around the world – has been closely watched due to its potential to dilute the family’s controlling stake in Samsung.
The family said they plan to pay the bill over five years in six installments, starting this month.
“It is our civic duty and responsibility to pay all taxes,” the family said in a statement released by Samsung.
The share price of Samsung C&T Corp (028260.KS) – the de facto holding company of the Samsung conglomerate – fell as much as 5.5% after the statement, which provided no details on how Lee’s shares would be distributed or sold, nor on how the family planned to fund the payments.
“There has been general investor disappointment as no details of how the stakes will be divided have been revealed,” said analyst Lee Sang-hun of HI Investment & Securities.
Instead, investors will have to wait for regulatory filings to find out about changes in the shareholding of Lee’s son and Samsung Electronics vice president Jay Y. Lee, or other family members.
The family had discussed using affiliate shares as collateral for personal loans to pay part of the tax bill to avoid selling Samsung’s holdings, Reuters reported last week.
Analysts said the family would likely use loans and dividends on their own and Lee’s shares to pay tax.
Lee’s stake, by value, includes 4.18% Samsung Electronics, 0.08% Samsung Electronics Preferred Stock, 20.76% Samsung Life Insurance Co Ltd (032830.KS), 2.88% Samsung C&T and 0.01% of Samsung SDS Co Ltd (018260.KS).
Jay Y. Lee is the main shareholder of Samsung C&T with a 17.33% stake.
The heir is currently on half of a 30-month jail sentence for corruption and other offenses. The presidential Blue House on Tuesday rejected calls from corporate lobby groups for a pardon. Read more
HEALTH AND ART
In 2008, Samsung announced plans for a large donation to the company when Lee resigned as chairman after being charged with tax evasion.
As scheduled on Wednesday, the family announced they would donate 1 trillion won to improve public health care, including 500 billion won to build South Korea’s first infectious disease hospital.
Much of Lee’s $ 1.76 billion personal art collection, including works by Picasso, Monet and Chagall, will be donated to organizations such as the National Museum of Korea and the National Museum of Art. modern and contemporary, the family said.
The remaining works by Giacometti, Rothko and others will be managed by the Leeum Samsung family and art museum, the Yonhap news agency reported.
The collection was previously the subject of public calls to conserve all works of art in South Korea. Last month, former culture ministers and arts groups called for a new law to allow the family to donate the art instead of part of the tax bill.
Samsung Electronics stock closed down 1% on Wednesday, in line with the benchmark KOSPI stock market index (.KS11). Samsung C&T finished down 3%.
($ 1 = 1,111.7700 won)
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