Stock-rich KCC's shareholdings exceed its market cap

The company rejects calls to sell shares in Samsung C&T and other Korean companies

KCC had a booth at PCIM Europe 2024, a power electronics exhibition, in Germany in June (Courtesy of KCC)
KCC had a booth at PCIM Europe 2024, a power electronics exhibition, in Germany in June (Courtesy of KCC)
Ik-Hwan Kim 2
2024-08-21 17:08:54 lovepen@hankyung.com
Corporate strategy

KCC Corp., a paint and glass maker but better known as a white knight for South Korean conglomerates, holds more than 4 trillion won ($3 billion) worth of shares in Samsung C&T Corp., HD Korea Shipbuilding & Offshore Engineering Co. and a US silicon maker, together surpassing its market capitalization of 2.6 trillion won.

KCC has played a key role in helping owner families of Samsung and Hyundai defend their management rights against activist funds such as New York-based Elliott Management and Mason Capital Management during their merger or spin-off processes.

According to the Financial Supervisory Service, KCC’s shares in Samsung C&T, HD Korea Shipbuilding and Momentive Performance Materials Korea Co., a unit of the US-based silicone maker Momentive Performance Materials, were valued at a combined 4.5 trillion won as of the end of June.

The value swelled by more than 1 trillion won compared with the end of last year.

KCC's stakes in major companies and their market/estimated values (Unit: billion won)
KCC's shareholding ratio Market value as of end-June, 2024 Estimated capital gains in H1, 2024
Samsung C&T (9.57%) 2,415.4 212.6 
HD Korea Shipbuilding & Offshore Engineering (3.91%) 438.9 104.8
Momentive Performance Materials Korea (100%) 1,675.0 Not available
(Note: Momentive Performance Materials is preparing to list on the New York Stock Exchange)
(Source: The Financial Supervisory Service, calculations by The Korea Economic Daily

KCC first invested in Samsung C&T in 2012 by purchasing shares in then-unlisted Samsung Everland Co. The amusement park operator was merged into Samsung C&T.

In 2015, it raised its ownership of Samsung C&T, a move seen as aimed at backing the top shareholders of Samsung holding company against Elliott Management that led to a proxy battle to block a merger between Samsung CT&T and Cheil Industries Inc.

Elliott argued their combination was aimed at tightening the control of Jay Y. Lee, now Samsung Group chairman, over the group and would undermine minority shareholders' interests.

KCC was established in 1958 by Chung Sang-yung, a younger brother of Chung Ju-yung, founder and the late chairman of Hyundai Group.

In the early 2000s, KCC bought up shares in Hyundai Heavy Industries Co., Hyundai Motor Co., Hyundai Mobis and Hyundai Development Co. (HDC) to ward off any hostile investors in the process of splitting Hyundai Group into smaller business groups after its founder Chung Ju-yung died in 2001.

Some KCC shareholders are asking the company to cash out of Samsung C&T and other shares when their share prices rise. Particularly, shares in HD Korea Shipbuilding have rallied, buoyed by the string of orders received.

But it rejected such a call, saying it has no plan to sell Samsung C&T shares but is working on Momentive Performance Materials' initial public offering.

Write to Ik-Hwan Kim at lovepen@hankyung.com
 


Yeonhee Kim edited this article
#KCC #whitenight #SamsungC&T #HDKoreaShipbuilding&OffshoreEngineering #ElliottManagement

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