Samsung C&T, the trading and construction unit of Samsung Group, has reiterated its goal to double its annual sales following its tie-up with Cheil Industries, the group’s de facto holding company.

Samsung C&T claimed that synergies after the proposed merger with Cheil would bring in about 60 trillion won ($54 billion) in sales with net income before taxes reaching 4 trillion won by 2020.

The company said the combined entity, if approved by shareholders in a meeting on July 17, would diversify its business areas to biotechnology, food and beverages, construction and leisure sectors.

Local analysts supporting the view say the biggest advantage of the merger is streamlining the group’s business to improve efficiency and quickly adapt to changes in the industry.

“Samsung C&T and Cheil Industries have overlapping business areas, and the structure of both corporations allows for complementary strategies in other business areas,” Kim Jang-won, a researcher at IBK Securities, said.

Market insiders emphasize that not only Samsung C&T, but also other industry players should focus on biotechnology, from which Samsung expects to generate about 1.8 trillion won by 2020.

Baek Kwang-jae, a researcher at Kyobo Securities wrote in his report, “(The new Samsung C&T) will play the leadership role in the biotechnology business, which is the group’s new growth engine.”

Baek added that the combined company would secure capital that can be leveraged for additional investments to promote the biotechnology business and business expansions in biomaterials.

Samsung is reportedly considering listing Samsung Bioepis, a developer of biotechnology medicines, on the Nasdaq stock market.

The effort to raise funds for research comes as its parent company focuses on expansion in the drug and biotechnology industry, given its saturation in the electronics market.

“(The new merged entity) will play a central role in the group’s corporate governance and is expected to receive premiums during the process of corporate governance restructuring,” Yoon Tae-ho, an analyst at Korea Investment & Securities said.

While Samsung C&T argues their push for a tie-up with Cheil is designed to overcome the structural difficulties that the construction and trading sectors have been facing, some investors including U.S. hedge fund Elliott Associates have opposed the deal, claiming it harms minority shareholders’ interests. 

By Suk Gee-hyun (monicasuk@heraldcorp.com)