Merger Miss
Business consolidation between Samsung Heavy Industries and Samsung Engineering has hit a wall, impeding the business restructuring of the Samsung Group that has continued for about a year.
In fact, both companies rarely affect corporate succession because the owners, including Chairman Lee Kun-hee, have no shares in these companies. Also, they are not parts of the cross shareholding structure of the Samsung Group, either.
Still, the question of who the new owner of the heavy industries and construction arms will be after the completion of the succession process has gone unanswered. Industry insider consensus is that Samsung Electronics Vice Chairman Lee Jae-yong will take the main subsidiaries such as Samsung Electronics and those in the financial industry, while Hotel Shilla President Lee Bu-jin will be in charge of transport logistics, leisure, and services, and Cheil Worldwide President Lee Seo-hyun will be responsible for fashion and media.
Samsung Heavy Industries is owned mainly by the subsidiaries in the electronics field, including Samsung Electronics (17.6 percent), Samsung SDI (0.4 percent), Samsung Electro-Mechanics (2.4 percent) and Samsung TechWin (0.1 percent). The two largest shareholders in Samsung Engineering are Samsung SDI (13.1 percent) and Samsung C&T (7.8 percent). As such, vice chairman Lee Jae-yong was expected to take the helm after the merger.
However, new scenarios are likely to emerge after the consolidation failure, and one of them is the merger between Samsung C&T and Samsung Engineering, which was put on the discussion table last year.
Nevertheless, securities market experts and those in the business community are predicting that the Samsung Group will retry to merge the two by adjusting the conditions. At first, the exchange ratio was 1:2.36. In other words, Samsung Heavy Industries was planning to issue 2.36 new shares for every single Samsung Engineering share. Some pointed out that Samsung Engineering was overvalued. The group itself is also positive about the retry. “We might make a new attempt in view of market situations and shareholders’ opinions,” said a Samsung Heavy Industries executive, adding, “Collaborations between the two subsidiaries will keep going on for greater dominance in the global offshore plant industry.”