Chemical Conundrum
Rumors that the Samsung Group will sell Samsung Fine Chemicals are rising up again. It has come after Samsung Fine Chemicals recently moved out from Samsung’s Suwon complex and relocated to Glass Tower in Daechi-dong, Seoul.
According to industry sources on Oct. 29, Samsung Fine Chemicals, the only chemical unit, moved its office to Daechi-dong from the Samsung headquarters in Seocho-dong, on Oct. 26, sparking the rumor. The company came back to Seoul just a year and seven months after it moved its office to Samsung’s electronic materials R&D complex in Suwon City in March last year.
In particular, Samsung SDI acquired the battery research and development facility, patent rights, and its stake in STM, which is a battery cathode material manufacturer jointly set up by Samsung Fine Chemicals and Japan's Toda Kogyo Corp. in 2011, at the end of Aug. Accordingly, it lent weight to the interpretation that Samsung Group may have already completed its business reorganization. At that time, Samsung Fine Chemicals also sold a building in the Suwon electronic materials R&D complex, along with the business reorganization.
In the Big Deal between Samsung and Hanwha at the end of 2013, Samsung Group sold off its four chemical and defense units to Hanwha Group at once, and Samsung Fine Chemicals was the only one left. In this regard, rumors spread that the company will be acquired by Hanwha soon.
Industry insiders say that Lotte Chemical is recently emerging as the “prospective buyer” of Samsung Fine Chemicals. An official from the industry said, “There have been rumors that Lotte Chemical is aggressively making investments in the chemical sector and seeking a new investment.”
In fact, Lotte Chemical invested 2.9 trillion won (US$2.53 billion) in a shale gas-based ethane cracker plant in the U.S. alone this year, expanding its business areas. An official from Lotte Group said, “It is true that Chairman Shin Dong-bin is very interested in the chemical industry, compared to other affiliates.”
Regarding this, an employee from the Ulsan plant of Samsung Fine Chemicals said that the field manager recently asked employees to stay calm and keep up the good work as rumors that the company will be sold to Lotte spread quickly. Lotte Chemical posted 3.03 trillion won (US$2.65 billion) in sales, 484.5 billion won (US$423.33 million) in operating profits and 250.3 billion won (US$217.7 million) in net profits in the third quarter. For accumulative results from the first to third quarter, the company recorded sales of 9.01 trillion won (US$7.87 billion), an operating profit of 1.3 trillion won (US$1.14 billion) and a net profit of 830.2 billion won (US$725.38 million). The operating profit increased as much as 342 percent from the same period a year ago.
KCC is considered another prospective buyer of Samsung Fine Chemicals. KCC bought a 5.76 percent stake in Samsung C&T when Samsung C&T and Cheil Industries merged, exercising its voting rights. Not only in return for KCC’s help but also business correlation also lends support to the rumors that KCC will take over Samsung Fine Chemicals. Hecellose is a high value-added product produced by Samsung Fine Chemicals, and is widely used as an additive for paint.