M&A Drive Halted Temporarily
The number of subsidiaries of Samsung Electronics Co. decreased by 7 this year. This shows a stark contrast with the company’s move last year when it increased the figure by 100. This is because Samsung halted its merger and acquisition (M&A) drive temporarily.
According to the business community and the Financial Supervisory Service on August 28, the number of Samsung Electronics’ subsidiaries came to 263 as of the end of June, down 7 from the end of last year.
This year, one investment fund subsidiary was newly established, while eight subsidiaries were sold or liquidated. The seven subsidiaries included four in the Americas, two in Europe and one in Asia and China each.
Samsung Electronics sold a whole 100 percent stake in Nexus DX, an advanced diagnostic solution provider in the U.S., in May. The company merged S1NN USA and Harman Connected Services Holdings with other Harman’s subsidiaries. It also merged Samsung Pay America with Samsung Electronics America. Then, Samsung Electronics liquidated Joyent and IDT Technology in Europe, Harman Malaysia and Harman Taiwan.
In 2017, 120 subsidiaries of Samsung Electronics were incorporated and 19 subsidiaries were excluded. In other words, the number of its subsidiaries grew by 101. Samsung Electronics aggressively pursued M&A deals after vice chairman Lee Jae-yong took the company’s helm following chariman Lee Kun-hee’s hospitalization in 2014.
In particular, the acquisition of global leading automotive electronics firm Harman International Industries for 9.7 trillion won (US$875 billion), the nation’s largest M&A deal in history, was the decisive point. After the acquisition of Harman was completed in March last year, about 110 subsidiaries of Harman came under Samsung Electronics.
Most of the subsidiaries that were added last year were the outcome of M&A deals in 2016. Samsung Electronics carried out nearly 30 M&A deals for two years from 2014 when vice chairman Lee became the top decision maker until he was arrested.
The number of M&A and sales deals officially announced were 19 and 9, respectively. In short, there was more than one M&A deal every month. LoopPay, which provided original technology of Samsung Pay, VIV Labs, an artificial intelligence (AI) firm, Dacor, a premium built-in home appliance maker, have become a member of Samsung Electronics. But Samsung’s M&A deals have been halted since November 2016 when the "Choi Soon-sil Gate" occurred.
However, Samsung Electronics is expected to resume its M&A efforts as Lee has returned to management. The company is planning to inject 20 trillion won (US$18.02 billion) out of the recently announced 180 trillion won (US$162.38 billion) investment plan into M&A deals.