Rumors about Merger between Samsung Electronics and Display Re-emerge

It’s rumored that Samsung Group’s component affiliates will be restructured with Samsung Electronics as the center. The group announced that Kwon Oh-hyun, chief executive and vice chairman of Samsung Electronics Co., will double the role as chief executive of Samsung Display Co., fueling the speculation. As Vice Chairman Kwon is now responsible for all of the semiconductor and automotive application component and display divisions, rumors about the merger between Samsung Electronics and Samsung Display is emerging again.

Samsung Display stressed a synergy between its semiconductor and display sectors in the device solution (DS) division on Apr. 29, dismissing such a speculation. However, industry sources said that the merger between the two companies is always possible considering their equity structures. 

Samsung Display was established in 2012 when Samsung Electronics’ liquid crystal display (LCD) business was merged with Samsung Mobile Display. Samsung Electronics holds an 84.8 percent stake in the company, while Samsung SDI owns a 15.2 percent stake. Since an item on the agenda can be easily resolved with just the decision by board of directors instead of additional shareholders’ meetings, the possibility of the merger is much higher than other subsidiaries.

Samsung Display said that there are no plans for the merger at the moment but industry watchers think that there is a possibility that Samsung Electronics buys all shares owned by Samsung SDI and makes Samsung Display a wholly owned subsidiary. Until now, rumors about the merger of Samsung Electronics and Samsung Display have emerged every time when there were Samsung’s business reshuffle issues.

Previously, Kim Jong-joong, head of the strategy 1 team at Samsung Future Strategy Office, said last Nov., “Since Samsung Display’s performance is already reflected in Samsung Electronics’ performance through consolidated financial statements, there is no need to be merged. Rumors about the merger between the two companies are more like a novel.”

However, Kim said on April 27, “We can’t say for sure that there are more business reorganizations or not in the future including subsidiaries.” Industry sources said that his remark may suggest the possibility of Samsung Group’s additional business reshuffle on its subsidiaries.

The group’s decision to change the head of Samsung Display has caused jitters around its other information technology (IT) affiliates, such as Samsung Electro-Mechanics and Samsung SDI. In particular, rumors has come out again that the group can reduce the number of its businesses into three sectors, including digital module, and merge between Samsung Electro-Mechanics, which spin off its power module, tuner and electronic shelf label (ESL) businesses into employee ownership companies, and Samsung Electronics.  

Samsung Electro-Mechanics is currently carrying out a voluntary retirement program to downsize the company. Samsung SDI is also shifting its main business sector to battery after selling its chemical business, and has received the application for voluntary retirement from some idle and overlapped workforce from the end of last year.

This is because there are rumors that Samsung Electronics can absorb Samsung Electro-Mechanics, which focuses on the automotive application business, and Samsung SDI, which concentrates on the electric vehicle battery, in order to create a big car business division with the change of Samsung Display’s CEO.