Samsung Electronics Vice Chairman Lee Jae-yong has been released from prison in 353 days on February 5. The company is likely to resume aggressive investment and M&A activities.
Last year, Samsung Electronics’ new business-related investment was rather limited with the exception of its acquisition of Harman International Industries. Although the company’s facility investment amounted to a record high of 43.4 trillion won (US$39 billion) last year, most of the investment went to its existing businesses such as semiconductor and display.
Still, some point out that his trial was mostly about illegal solicitation for a transfer of management rights and, as such, it will not be easy for Samsung to reorganize its governance structure in spite of his suspended sentence. “The vice chairman is now free until a Supreme Court ruling at the least and he is likely to come up with some surprising business innovation plans at the shareholders’ meeting scheduled for next month,” said an industry insider.
M&A and Business Reshaping Likely to be Accelerated
The vice chairman came to the front in 2014 with his father, Chairman Lee Kun-hee, lying sick in bed. Upon taking charge, the vice chairman sold the Samsung Group’s chemical and defense subsidiaries in a lump. In late 2016, Samsung Electronics acquired Harman International Industries for US$8 billion. During the courses, the vice chairman remained bold and determined. This is why Samsung Electronics is expected to reaccelerate business reorganization and M&A from now on.
“The vice chairman’s management style is characterized by being aggressive in M&A as seen in the cases of SmartThings, LoopPay and Harman,” said an industry expert, continuing, “Samsung Electronics is likely to focus more on software and it may acquire another auto parts manufacturer as well in order to complete vertical integration in the automotive electronics industry.”
International Networking Expected to be Resumed
The vice chairman is expected to resume his meetings with IT moguls, too. It has been said that he used to gather ideas for business reshaping from such networking activities.
He was the only non-American invitee in U.S. President Donald Trump’s Tech Summit in December 2016. He attended a memorial service for Steve Jobs as well and met with Google founder Larry Page in Seoul in 2013. Before going to jail, he was a standing director of the Boao Forum and an outside director of Exor.
“The vice chairman used to stay abroad for four months or so each year, communicating with leading IT industry figures,” said an industry source, adding, “His networking will be a valuable asset for South Korea as a whole as well as Samsung itself with global economic issues such as trade disputes mounting.”