Samsung Heavy Industries To Absorb Engineering
Samsung Sings A Merger Tune: Samsung Heavy Industries To Absorb Engineering
Samsung is not wasting any time before it consolidates market share and scores brownie points. One of the latest steps it has taken in this direction is the move by Samsung Heavy Industries Co. Ltd. to absorb Samsung Engineering Co. Ltd. The deal is worth a lot of numbers too. The total deal is for $2.46 billion which adds up to 2.5 trillion won. This is the latest tie up between the 2 companies with related businesses in the largest conglomerate in South Korea.
Samsung's current restructuring has increased in recent times. Stories also abound regarding the next ownership of the South Korean conglomerate. With Lee Kun-hee, the patriarch of the Samsung family nearing his retirement according to media reports, investors now await news of how the Samsung Group's ownership will transfer to Jay Y. Lee and his 2 siblings.
Chiel Industries Inc once known as Samsung Everland is now scheduled for an IPO along with Samsung SDS. Samsung Heavy is no lightweight either. The company is the world's second largest shipbuilder. It has announced a merger with Samsung Engineering indicating that the combined sales of around 25 trillion won were attained last year. The South Korean conglomerate is now targeting growth of 40 trillion wons by the two companies in the year 2020.
With this merger, Samsung Heavy has indicated that "Through the merger, Samsung Heavy and Samsung Engineering has become able to provide total solutions spanning both land and sea for clients including oil majors." Samsung Heavy will now issue about 94 million shares to the shareholders of Samsung Engineering. The shares are valued at 26,972 won each. The total deal was held to be around 2.5 trillion won. Samsung Heavy shares closed at around 27,250 won per share.
Positive market trends were noted for both Samsung Heavy and Samsung Engineering. There have been a continuos series of mergers between such twin companies over time and the merger is a further extension of this trend, according to a quote by analyst Park Joong-sun from Kiwoom Securities.
Analysts are also holding that the deal does not have much to do with the succession process either as none of the future owners have shares in either of the 2 firms. Samsung Group had earlier split off into fashion and electronics firm Cheil Industries Inc wherein it merged with materials business firm Samsung SDI and its fashion business unit joined hands with Samsung Everland.
An unlisted unit of Samsung General Chemicals Co. Ltd. Acquired Samsung Petrochemical recently at the start of the year. With restructuring and merging on the scene, Samsung clearly looks to be working towards consolidation that has value for its future growth.
