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UPDATE 2-S.Korea's Samsung SDS plans IPO as Lee family prepares restructuring
May 8, 2014 / 2:20 AM / 3 years ago

UPDATE 2-S.Korea's Samsung SDS plans IPO as Lee family prepares restructuring

* Samsung SDS surges to 197,500 won in OTC market, valuing the firm at 15 tln won

* Shares of shareholders Samsung C&T, Samsung Elec-Mech jump

* To select IPO lead managers this month (Adds comments from analysts, context)

By Miyoung Kim and Joyce Lee

SEOUL, May 8 (Reuters) - Samsung SDS, the IT solutions affiliate of Samsung Group, is planning a listing this year, signalling further restructuring of family ownership in South Korea’s biggest conglomerate.

Samsung SDS said on Thursday that it would decide on the size of the share offering after it chooses lead advisors this month.

The share sale could be the biggest IPO in South Korea this year, as many firms have withdrawn their listing plans due to a weak stock market.

The surprise IPO plan comes less than six months after Samsung SDS bought unlisted network solution provider Samsung SNS, which was then 45.69 percent-owned by Jay Y. Lee, son of Samsung Electronics Co Ltd Chairman Lee Kun-hee. SDS itself is partly owned by Jay and his two sisters.

“This signals acceleration of ownership changes, and the listing of SDS could be aimed at financing the changes,” said Lee Sang-hun, an analyst at HI Investment & Securities.

The IPO would give Lee’s children an opportunity to generate funds which they can use to invest in other key Samsung companies where they have virtually no stakes.

Many analysts say the children now have a chance to tighten their grip in companies such as construction unit Samsung C&T Corp. The Lee family also owns less than 5 percent of the crown jewel - Samsung Electronics.

The three Lee children will stand to make some good investment gains, analysts also say.

Prior to Samsung SDS’s acquisition announcement of SNS in September, SDS stock was worth around 83,000 won apiece in the over-the-counter market. The stock has since more than doubled to 197,500 won, valuing the company at around 15 trillion won and Jay Y. Lee’s SDS stake at 1.3 trillion won.

Lee’s two sisters Boo-jin and Seo-hyun, who each owns 3.9 percent of SDS, will also stand to make a windfall.

UPCOMING RESTRUCTURING

The next round of restructuring within the Samsung Group is more likely to focus on the construction business, which is scattered among three companies Samsung C&T, Samsung Engineering Co and Samsung Everland, analysts said.

Samsung C&T is widely expected to lead the construction business restructuring. The listing of SDS will value Samsung C&T’s 17.08 percent stake in the IT solution firm at 2.6 trillion won, they said.

Samsung Everland is also closely watched as the de facto holding company increased its enterprise value by taking over Cheil Industries Inc’s fashion business last year and may go public to allow the Lee family to monetize their 45.6 percent stake.

The latest restructuring also includes the acquisition of Samsung Petrochemical by unlisted Samsung General Chemicals. ($1 = 1022.5500 Korean Won) (Additional reporting by Hyunjoo Jin and Changho Lee; Editing by Stephen Coates and Ryan Woo)

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