By Lee Chang-ho and Joyce Lee
SEOUL (Reuters) - The children of the Samsung Group's [SAGR.UL] patriarch do not plan to sell their shares in an IPO by Cheil Industries Inc, the de facto holding company for South Korea's largest conglomerate, a source with direct knowledge of the matter said on Tuesday.
Cheil Industries is expected to be the key vehicle through which the Lee family will retain control of the Samsung Group. Lee Kun-hee, family patriarch and chairman of Samsung Electronics Co Ltd (KS:005930), has been hospitalized since May following a heart attack, adding urgency to the process of transferring control.
Analysts had speculated that his three children may seek to sell some of their shares to help pay for an inheritance tax bill that may come in north of $6 billion when the elder Lee dies. Share sales could still come after the IPO.
Even without selling shares, the up to $1.4 billion IPO will allow son Jay Y. Lee and sisters Lee Boo-jin and Lee Seo-hyun more financial flexibility as they will be able to use those shares as collateral to borrow money.
Preliminary plans show the IPO will result in some dilution of the children's combined holding in Cheil to just below 39 percent from about 42 percent, the source said.
Other Cheil shareholders will sell around 18.74 million shares while 10 million new shares will be issued. An indicative price range of 45,000 won to 53,000 won per share has been set, the source said.
The pricing figures were in line with previous information given by sources.
A spokesman for Cheil, which changed its name from Samsung Everland Inc in July, declined to comment on IPO terms. Cheil means "No.1' in Korean.
While the roadmap to succession remains unclear, analysts believe Samsung Group could pursue all-stock mergers of sister companies or transfer assets between group firms to streamline the chaebol's structure and strengthen the younger Lee's control in key firms including Samsung Electronics.
Cheil shareholders expected to sell part of their stakes include Samsung SDI Co Ltd (KS:006400), which is likely to sell 5 million shares, the source said. That would be equivalent to about half its 8 percent stake.
Samsung Card Co Ltd (KS:029780) and KCC Corp (KS:002380) are also expected to sell shares, he added.
Daewoo Securities (KS:006800), Citigroup (N:C), JPMorgan (N:JPM) and Woori Investment & Securities (KS:005940) are advising on the listing, which could come as early as December.
(Reporting by Changho Lee and Joyce Lee; Writing by Se Young Lee; Editing by Tony Munroe and Edwina Gibbs)