Samsung To Sell Stakes in 4 Firms For USD 1.72 Billion
Samsung To Sell Stakes in 4 Firms For USD 1.72 Billion
South Korean firm Samsung Group has just announced what is a major move in the current corporate restructuring the firm is undergoing. The firm is selling stakes in 4 chemical as well as defence firms to the tune of 1.9 trillion won or USD 1.72 billion, as per a Reuters report. The buyer of the stakes is none other than the Hanwha Group. This is the latest step the company has taken towards a major restructuring.
Divvying up The Conglomerate
Reuters has indicated that the business empire of this corporate conglomerate is being reorganised and restructured to make way for the heirs of the current chairman Lee Kun-hee who has been ill for some time. Stake transfers between the units are meant to “narrow the sprawling group’s focus” says Reuters.
6 Trillion Won Inheritance Tax
The heirs are also aiming to pay an estimated 6 trillion won tax inheritance bill. The listing of Samsun SDS Co and IPO of Cheil Industries is aimed at providing financial flexibility. In the latest move towards corporate restructuring, Samsung Electronics will be selling a 32.4% stake in Samsung Techwin Co Ltd to Hanwha Corp for 840 billion won, the group has indicated in a statement.
A 57.6% stake in Samsung General Chemicals Co Ltd to Hanwha Chemical Corp and Hanwha Energy Corp has also been announced for USD 1.06 trillion won. The portion of Samsung Thales Co Ltd owned by this group which is a JV between Thales and its Total Petrochemicals Co Ltd will also be transferred to the Hanwha group.
Samsung Electronics indicated in a separate regulatory filings that 761 billion won released from these deals will be used for investment in new businesses.
Samsung Strengthening Its Core
Analysts say that chemical and defence sales will help the group to focus on its basic and fundamental strengths of information technology as well as financial services, construction and ship building. “The asset sales are expected to help Samsung Electronics raise capital resources for investment in new businesses and focus on its core competency,” Samsung Electronics, one of the companies selling the stakes, said in a statement to Bloomberg.
Hanwha Group
Hanwha Group is the 10th largest corporate group in South Korea. Through this acquisition, it is aiming to boost its presence in defence and petrochemicals business. Hanwha is a massive conglomerate whose flagship unit is Hanwha Chemical Corp. It is looking to become the largest petrochemical business in terms of revenue in South Korea.
Conclusion
Around USD 8 billion worth of deals have been conducted by Samsung which is on restructuring spree. Its market value has risen to USD 169 billion today. This increase is massive and the company is looking to counter challenges from high end Apple’s iPhone 6 and Xiaomi’s budget phones, says Bloomberg. On all spheres, there are competitors and the restructuring could well be a fresh beginning for the massive Suwon based corporate conglomerate.
