South Korea’s top conglomerate Samsung Group is abuzz with talks about a second round of sweeping group-wide restructuring to realign business and ownership structure in tune with a new leadership and corporate envisioning under heir-in-waiting Jay Y. Lee, son of bed-ridden group chairman Lee Kun-hee.
Rumors spread wildly about breakups and mergers among Samsung affiliates after Samsung SDS, an IT arm of Samsung Group where scions of the Lee family have large stakes in, disclosed on Tuesday that it would spin off logistics business to “strengthen competitiveness of other divisions.” Several local media outlets reported that Samsung SDS would be transferring its logistics arm to Samsung C&T, the group’s de factor holding company that completed merger with Cheil Industries in suspected move to cement the younger Lee’s hold over the group.
Samsung SDS mostly services IT network for Samsung companies. The company won’t be able to merge the logistics entity into another Samsung unit easily as its shareholders would likely protest to the move that could undermine their shareholding value.
Industry pundits predict Samsung SDS will inevitably have its logistics business go under Samsung C&T and its information technology (IT) services under Samsung Electronics Co. Despite its small place in the Samsung umbrella, the owner family members own a combined 17 percent of Samsung SDS.
Another unit Samsung Group is mulling to shed is its house ad agency Cheil Worldwide Inc.. A senior Samsung official who asked to be unnamed said that unofficial talks with Frency agency Publicis to sell Cheil Worldwide had been slow due to difference in the deal price. Cheil hinted that negotiations turned favorable for Samsung after the deal was publicized through foreign media reports. Samsung Group plans to comment on the deal on June 15.
Market watchers speculate Samsung Group has widened the choice of buyers to private equity funds so that other affiliates could repurchase the professional sports clubs under Cheil.
For the troubled shipbuilding unit Samsung Heavy Industries which has applied for creditors’ relief in return for a pledge to raise 1.5 trillion won ($1.3 billion) on its own to fight liquidity woes, Samsung Group could reattempt merging it with Samsung Engineering. In 2014, the two companies had promoted a merger but the plan fell through due to opposition from both shareholders.
There is another talk that Samsung C&T may sell its housing construction unit, deeming it less lucrative.
The younger Lee who has taken helm after his father fell ill has decisively turned focus on futuristic businesses like bioengineering, smart automotive parts, and batteries, shedding non-core areas like chemical and defense divisions.
By Lee Seung-hoon
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]