The stock market went frantic. Business analysts were excited. News of the merger between Cheil Industries and Samsung C&T ― two main pillars of Samsung Group ― revved up the business world through last week.

But as time passed, the victor of the merger between a fashion-chemical company and construction-trading firm became very clear. According to news reports, Samsung Group vice chairman Lee Jay-yong saw his wealth increase by around 1 trillion won ($897 million) within a week, given his 23.23 percent stake in Cheil Industries.

Apart from the wealth increase, the 46-year-old took a step closer to inheriting the $529.5 billion business group from his father and Samsung chairman Lee Kun-hee who fell ill in May 2014.


Analysts agreed that the merger is expected to help Lee Jay-yong strengthen his control of Samsung Electronics, which yields more than half of the entire group’s revenue.

Samsung C&T owns 4.1 percent of Samsung Electronics and 17.1 percent of Samsung SDS. 

At the new Samsung C&T ― the name that will be retained by the merged entity ― Lee’s stake will stand at 16.5 percent, compared to his 23.23 percent stake in Cheil Industries. However, the number of shares is very large and hard to reach for other people, securing his dominant position in the group, observers say.

Known as rather shy but friendly ― some reporters attest that Lee would put his arms around them and talk in a casual manner ― and less authoritative, he has built a good reputation within the group.

“Lee Jay-yong has a lot to prove. His grandfather and Samsung founder Lee Byung-chull had great eyes on the future and pushed semiconductors as the company’s next growth engine in the 1980s. Lee Byung-chull’s son Lee Kun-hee knew where the wind was blowing. He was also a very charismatic person and made Samsung the Samsung you see,” an insider said.

“It must be quite a challenge for the third-generation successor to emulate such success. The business environment is getting tougher,” he added.

The fact that the National Pension Service, the largest shareholder of Samsung C&T, may veto the merger is also a big threat. The NPS recently refused the merger of Samsung Engineering and Samsung Heavy Industries, which had to be nullified.

One of the ways to show his managerial talent will be to outpace the success of his younger sisters ― Shilla Hotel CEO Lee Boo-jin and Cheil Industries’ fashion division president Lee Seo-hyun.

Lee Boo-jin and Lee Seo-hyun also hold 7.74 percent of Cheil Industries each and reportedly saw their wealth swell by 500 billion won through the recent merger news.

Having grown up in the rather liberal and competitive family, the two have also been actively participating in the family business. Hotel Shilla reported record-breaking sales last year and Cheil’s fashion unit also showed gradual success through the launch of low-end brands.

“At this point, it is quite certain that Lee Jay-yong will take over the group. But praise for his sisters will always be a challenge,” a pundit said.

So, the question lingers: If he finally takes the helm, what will become of the sisters?

Rumors have swirled that Lee Boo-jin will join Samsung C&T to take over the leisure division that was previously part of Everland. Some other rumormongers say that Lee Seo-hyun, who has long led Cheil’s fashion and advertisement agency units, is likely to lead half of Samsung C&T.

Another emerging prediction is that both the sisters are likely to split from the group.

In the past Samsung sisters have gone separate ways.

In 1991, Lee Kun-hee’s elder sister Lee In-hee split Samsung’s home furnishing unit and established Hansol Group. Their younger sister Myeong-hee established Shinsegae Group with Samsung’s retail arm in 1997.

“Will the sisters part ways with their elder brother? Perhaps one day,” an observer said, citing the aforementioned cases.

“But I think they will remain under the Samsung umbrella until they prove that they have the capability to lead a business enterprise without the Samsung brand name,” he added.

Local news outlets reported that their mother Hong Ra-hee will play a key part in the final inheritance structure. Business Post reported that she has been leading the family and is hands-on with the governance structure since her husband fell ill.

By Bae Ji-sook (baejisook@heraldcorp.com)