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Samsung General Chemicals, Samsung Petrochemical Merge
Samsung Chemicals
Samsung General Chemicals, Samsung Petrochemical Merge
  • By matthew
  • April 3, 2014, 09:48
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The Daesan Chemical Complex in South Chungcheong Province, South Korea, is home to a Samsung petrochemical plant.
The Daesan Chemical Complex in South Chungcheong Province, South Korea, is home to a Samsung petrochemical plant.

 

Samsung General Chemicals and Samsung Petrochemical voted for a merger at the board of directors meeting on April 2. The merger ratio between the two is 1:2.1441, and the former is to issue new shares for exchange with the latter’s shares. The merged company uses the name of Samsung General Chemicals.

They are planning to complete the consolidation process by June 1 after general shareholder approval on April 18. A Samsung General Chemicals representative said in a statement that the company made the decision to become a global leading petrochemical company by overcoming adverse business conditions as of late.

Samsung General Chemicals’ management is expecting that the consolidation will result in a highly-organic business structure of the intermediate or downstream chemical products of Samsung Petrochemical and the basic or upstream products and energy business of Samsung Total, one of its subsidiaries. This, in turn, is expected to lead to greater sustainability and stability of the company as a whole.

Established in 1988, Samsung General Chemicals merged on a 50-50 basis with Total in 2003 to set up Samsung Total. At present, Samsung General Chemicals owns 50 percent of Samsung Total.

Samsung Total produces a wide range of naphtha-based products, ranging from ethylene, propylene, and C4 oil to styrene monomer, paraxylene, and many other energy products. Samsung Petrochemical, which was founded in 1974, has produced approximately two million tons of purified terephthalic acid for polyester fiber in a year. Last year, it set up a joint corporation with SGL, a carbon fiber manufacturer in Germany, and bought a formic acid production plant as well.

Industry insiders are predicting that Hotel Shilla President Lee Bu-jin will have a greater influence than before on the chemical and petrochemical subsidiaries of the Samsung Group through the merger. Her shareholding ratio in Samsung Petrochemical is 33.2 percent, but will drop to 4.9 percent in Samsung General Chemicals after the process. Still, she is the largest individual shareholder in spite of the decline. “It seems that more mergers are waiting for chemical affiliates,” said one of them, adding, “The third-generation ownership structure is likely to revolve around the electronics, fashion, and chemical arms.”