Focusing Core Businesses
Samsung Electronics said on September 18 that it has sold shares in ASML, Seagate, Rambus and Sharp in the wake of the recent sale of its printing business to HP.
The total value of the stakes sold amounts to 1.2 trillion won to 1.3 trillion won (US$1.06 billion to US$1.15 billion), and such an action made by the company is interpreted as a preemptive move to close its marginally insignificant businesses to put greater focus on its main businesses such as semiconductors and displays.
Samsung Electronics sold half of its shares in Netherlands-based semiconductor equipment maker ASML, reducing its stake to 1.5% or 6.3 million shares. The sale is made in terms of investment collection, and it will continuously maintain a partnership with ASML as a core equipment partner.
The company also sold 12.5 million shares (4.2 percent stake) in U.S.-based storage company Seagate. In 2011, it had bought some shares in Seagate while selling its HDD business to the US firm. Later it disposed of some of them with the remaining shares sold this time.
In addition, Samsung sold its entire 4.5 stake (4.8 million shares) in the US-based memory system provider Rambus.
It also sold all of a 0.7% (35.8 million shares) stake in Japan-based Sharp, which was a move designed to diversify supply channels for LCD panels in 2013. “The relationship with Sharp to supply panels is reliably maintained, so it is unaffected by the stake sales,” according to Samsung Electronics.
The series of sales of noncore businesses that Samsung Electronics has undertaken are seen as a step to arrange noncore affiliates and businesses while the management system is being transferred to the third generation leadership of Lee Jae-yong. In line with the action, the company is pushing to realign its core businesses around electronics, bio and finance.
Over the last two years, when the chairman Lee Kun-hee has been serious ill, Samsung Group merged Everland, Cheil Industries, and Samsung C&T and got them listed on the KOSDAQ, along with Samsung SDS. It has successfully got ahead of its rivals by selling stakes in the second business such as defense and chemical businesses while concentrating its investment on semiconductors, smartphones, and televisions, leading the global market. It has set up an electronic device business team at Samsung Electronics, while paying keen attention to future businesses by starting construction of the world’s largest bio plant.
Some rumors circulating in the stock market involve selling or merging some affiliates including Samsung Heavy Industries, Samsung Engineering, Samsung C&T’s construction unit, Samsung Card, and S1. All of them continue to suffer from poor performance due to changes to industrial conditions while being classified into noncore businesses. Samsung Group pushed the sale of Cheil Worldwide in the first half of the year, but the negotiation fell through.
The LED business of Samsung Electronics is on the list of areas expected to be sold. Even though the medical equipment division was on the list due to its poor performance, now it is reclassified into the future investment business as the healthcare market has emerged as a potential market. Samsung SDI proclaiming to be a battery maker is expected to focus its energy on the energy business in the long term while cutting down the electronic material business with little contribution to the performance.