Samsung Group announced on Wednesday the sale of stakes in four petrochemical and defense affiliates for $1.7 billion as the South Korean giant steps up restructuring efforts ahead of a generational ownership succession.
The sale to the Hanwha conglomerate, which has major petrochemical holdings, is expected to be finalized in the first half of next year, Samsung said in a statement. The deal involves Samsung Electronics and other group affiliates selling their combined stakes in defense firm Samsung Techwin and Samsung General Chemicals, Channel NewsAsia reported Wednesday.
A 50 percent stake held by Samsung General Chemicals in its joint venture with the French energy giant Total, called Samsung Total, will also be sold to Hanwha, along with Samsung Techwin’s 50 percent holding in a joint venture with French defense firm Thales.
It marks the first sale of Samsung affiliates since the group was forced to shed its struggling carmaking unit in 1997 during the Asian financial crisis.
Samsung is comprised of dozens of units including Samsung Electronics, the world’s top maker of mobile phones and TVs, which earn a collective revenue equal to around 20 percent of South Korea’s annual economic output.
The sell-off announced on Wednesday indicates a desire to streamline the behemoth so as to concentrate on its key profit-making units, said Kim Ji-san, analyst at Seoul-based Kium Securities. “The deal shows Samsung is determined to shed non-core units deemed not competitive enough globally and to focus on key businesses like electronics, finances, construction and engineering,” Kim said.
Samsung Techwin, a developer of security equipment and aerospace technologies, reported a net profit of 133 billion won ($120.2b) last year, but has amassed a net loss of 14.5 billion for the first three quarters of this year.
