The “new” Samsung C&T kicked off on Sept. 1 as the de facto holding company of Samsung Group, the nation’s largest conglomerate.
The group’s construction, trading, fashion, food and bio businesses are now reorganized under the new umbrella company, while Samsung Electronics and Samsung Life Insurance are responsible for tech and finance pillars, respectively.
The merger between Samsung C&T and Cheil Industries does more than combine two group units for business synergy. It is considered a crucial juncture for Samsung’s pending leadership transition to a new generation.
Industry sources say Samsung has long poured resources into the merger as part of the group’s succession plan.
“Cheil Industries made its stock debut right after Samsung chairman Lee Kun-hee was hospitalized in May last year. And it took only five months to announce its merger with Samsung C&T,” said an industry source on condition of anonymity.
“It was all part of the group’s contingency plan.”
At the new entity, Samsung Electronics vice chairman Lee Jae-yong, the group’s heir apparent, will become the largest shareholder with a 16.5 percent stake, wielding more influence throughout Samsung companies, especially the crown jewel Samsung Electronics.
The source added Elliott Associates, the U.S. hedge fund that had launched an aggressive campaign to block the merger, was also well aware of the intention of the merger plan.
The proxy battle between Samsung and Elliott was a neck-and-neck race. While Elliott filed several lawsuits to stop the merger vote from happening, Samsung ramped up efforts to persuade shareholders.
The merger got the final approval in the July 17 shareholders meeting, with 69.5 percent of Samsung C&T stakeholders supporting the deal. The company recently sealed the deal by paying 670.2 billion won ($566.7 million) on appraisal rights claims.
The new entity’s market capitalization is estimated at about 27 trillion won, the fourth largest in Korea after Samsung Electronics, Hyundai Motor and Korea Power Corporation.
For its soft-landing, it would not seek a drastic change in the leadership. Four CEOs from the two companies will be in charge of different business areas and join a board of directors. Samsung C&T president Choi Chi-hoon is likely to be named executive chairman based on seniority, sources said.
Another crucial task for the company is beefing up the group’s next-growth engine businesses, including biotech. The company aims to achieve 60 trillion won in sales by 2020, with biotech making up 1.8 trillion won.
Expectations are also high among investors about the company’s renewed shareholder-friendly policies that had been promised before the merger vote. The company also pledged to donate 0.5 percent of its operating profits for society.
By Lee Ji-yoon (jylee@heraldcorp.com)
