Samsung announced merger in affiliate companies to strengthen immediate heir’s future control in the organization

Cheil Industries Inc, a Samsung de facto holding company and Samsung C&T announced a merger on Tuesday.  Samsung conglomerate is on the move to manage its assets as a preparation for impending succession.

Samsung currently have 70 affiliate companies that comprise various share distributions among its stakeholders.  Its recent merger that combines two of its affiliates where Samsung's immediate heir Jay Y holds its biggest share is an effort to manage an expected transition as well as to strengthen the successor's impending lead in the company. After the merger, Jay Y will continue to be the major shareholder of the new company with 16.5% stakes.

Lee Jae-yong or better known as Jay Y is Samsung Electronics Chairman Lee Kun-hee's son and Vice President of the company. Chairman Lee with Jay Y and his sisters will dominate the new enterprise after the merger with a total of 30.4% shares which has soared since the announcement and reached the 15% daily limit. The merger is expected to be finalized by September this year.

The all-shares deal is estimated to be worth $9.3 billion in total. Samsung C&T Corp will offer 0.35 shares per 1 Samsung C&T share. Cheil Industries Inc is engaged in fashion, construction and a theme park while Samsung C&T Corp's reputation includes building the tallest building in Dubai and is known as Korea's largest construction company. It has also spawned into renewable energy business with its Canadian wind farm project. It was established in 1938 and the first Samsung company. Currently, it owns 17.1% of Samsung SDS Co, 12.6% of Cheil and 9.8% of Samsung Engineering according to recent reports.

Samsung's measure to strengthen its future leadership is positively received by the market as its stocks rose as soon as the merger announcement. It's likely that the company's business intuition and expertise will continue to reign in the country.