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By Bloomberg

Cheil Industries Inc., the de facto holding company of Samsung Group, agreed to acquire Samsung C&T Corp. for about $8 billion as the controlling Lee family restructures South Korea’s biggest conglomerate.

Cheil, with interests spanning construction and a theme park, will offer 0.35 share for each Samsung C&T share, according to a filing Tuesday. The offer values the target at about 3.5 percent above Friday’s closing price.

Samsung Group is revamping businesses as its leadership transitions to a new generation amid pressure from the South Korean government to simplify the chaebol’s organization. Lee Jae Yong, 46, is exerting more influence throughout the conglomerate a year after his father suffered a heart attack that has kept him from involvement in company operations.

“The merger will help expand Lee Jae Yong and the Lee family’s grip on the overall Samsung Group,” said Park Joong Sun, an analyst at Kiwoom Securities Co. in Seoul. “The merger provides clear messages to the market that it will play a key role in Samsung Group.”

Cheil Industries advanced 14 percent and Samsung C&T climbed by the daily 15 percent as of 11:44 a.m. in Seoul. The benchmark Kospi index declined 0.2 percent.

The combined entity will use the Samsung C&T name and be the fifth-largest company in South Korea by market capitalization, according to data compiled by Bloomberg. It targets about 60 trillion won in revenue in 2020, compared with 34 trillion won for both companies last year.

Cheil IPO

The companies will seek approval from shareholders July 17 to merge as of Sept. 1. The merger could be called off if shareholders seek to sell more than 1.5 trillion won in stock of each of the two Samsung units, the filings said.

Samsung has accelerated its restructuring since Lee Kun Hee, head of the founding family, was hospitalized in May last year.

Cheil was one of two initial public offerings held last year by the Lee family, which controls the conglomerate of about 70 companies through a web of cross shareholdings.

The conglomerate failed to merge Samsung Heavy Industries Co. and Samsung Engineering Co. in November after shareholders claimed buyback rights that exceeded 1.5 trillion won. Samsung recently completed a stake sale in chemicals and defense businesses to Hanwha Group.

Biggest Building

Samsung C&T, which is involved in heavy construction and importing chemicals and metals, owns 4.06 percent of Samsung Electronics Co., according to data compiled by Bloomberg. Samsung Electronics is the biggest company in the chaebol.

“Samsung Group is simplifying the command structure to strengthen Lee Jae Yong’s grip over the group,” said Chae Yi Bai, an analyst at the Center for Good Corporate Governance in Seoul. “The new structure helps Jay Y. get a more direct hold over the key affiliates like Samsung Electronics.”

Samsung C&T, South Korea’s biggest builder, was the first Samsung company established in 1938. It has expanded into renewable energy with a wind farm development project in Canada, and it also built the world’s tallest building in Dubai.

Samsung C&T also owns 17.1 percent of Samsung SDS Co., 12.6 percent of Cheil Worldwide Inc and 7.8 percent of Samsung Engineering, according to the company’s first-quarter financial report. The new entity will own 50.9 percent of Samsung Biologics, becoming the single-biggest shareholder after Samsung Electronics.

“The new entity could pretty much serve as the holding company for Samsung Group,” said Kang Seung Min, an analyst at NH Investment & Securities Co. in Seoul.

The merger will combine the construction businesses at the two units. It will also help Cheil Industries’ catering, resorts and fashion businesses to expand overseas using Samsung C&T’s global network, according to the statement.

The new entity aims to increase its revenue to about 60 trillion won in 2020, from a combined 34 trillion won in 2014, Samsung said in an e-mailed statement.