SEOUL, Sep. 2 (Korea Bizwire) – Two Samsung Group companies Samsung Heavy Industries and Samsung Engineering have decided to merge with each other in a board of directors meeting on September 1. The two companies will exchange shares at the ratio of 1 to 2.36. Samsung Heavy Industries will grant 2.36 shares to Samsung Engineering shareholders for every share of Samsung Engineering. The official merger will be finalized on December 1.
With the merger, Samsung Heavy Industries could secure the capabilities in engineering, purchasing, and project management, thereby raising its competitiveness in the area of offshore plant building.
As for Samsung Engineering, it will be able to diversify its business areas to high value-added land-based liquefied natural gas base and offshore plant construction. In terms of sales revenue, the two companies will be reborn as a super-large company with an annual sales revenue of 40 trillion won by 2020 from about 25 trillion won in 2013.
Park Dae-young, president of Samsung Heavy Industries, said of the merger, “Based on the world-class capabilities in plant construction, experience, and excellent land and offshore technical manpower, we will try to become a full-service plant builder with the world’s best competitiveness.”
Samsung Engineering president Park Jung-heum said, “After the merger, we will be able to respond to diverse demands of customers as a one-stop shop solution company. After the union, the merged company will change its corporate name as well.
Since late last year, Samsung Group has been busy restructuring its business portfolios. Within the past one year, companies such as Samsung SDS, Samsung Everland, Cheil Industries, Samsung SDI, Samsung General Chemicals have undergone consolidations and asset transfers.
Analysts see the latest announcement as a move to reform the group’s governance structure in preparation for succession of chairmanship. From a big picture perspective, Samsung Heavy Industries and Samsung Engineering would come under the influence of Samsung Electronics while Samsung C&T has strengthened its ties with Cheil Industries (formerly Samsung Everland).
A stock analyst said, “Give the three children of Samsung chairman Lee Kun-hee has no stake in Samsung C&T, it would have been difficult for the group to follow through a merger with Samsung Engineering to increase the market capitalization.” Another analyst commented that the third-generation owners will turn the group’s core affiliates into holding company structure in order to pay for inheritance taxes estimated at 6 trillion won.”
By Sean Chung (email@example.com)