Samsung snaps up a 10% investment in Pantech

Pantech, the country’s third-largest smartphone producer, has sold a 10.03 percent stake worth 53 billion won ($47.6 million) to Samsung Electronics to stabilize its management.

The company said yesterday it confirmed at a board meeting a plan to attract the large investment from the world’s top smartphone maker and industry rival.

“Samsung’s investment has raised the possibility for Pantech to lure additional investment,” said Pantech in a press release. While contributing to Pantech’s management stabilization, it is also expected to further solidify the information and communication technology (ICT) ecosystem in Korea by creating mutual growth and collaboration among Korean tech firms, the company added.

Following the stock acquisition, Samsung will emerge as the third-largest shareholder of Pantech following Qualcomm and Korea Development Bank, which respectively hold 11.96 percent and 11.81 percent stakes. Qualcomm raised its stake in Pantech in January. Just like the U.S. chipmaker, Samsung won’t be involved in company management. Pantech graduated from a four-year debt workout program in late 2011 but posted an over 100 billion won loss last year amid sluggish smartphone sales.

For the two competitors in the smartphone sector, the stock transaction is a win-win. Samsung has gained a steady parts sales partner. Pantech has bought chips, displays, batteries and printed circuit boards from Samsung and its affiliates Samsung Display and Samsung Electro-Mechanics. Last year alone, Pantech bought a combined 235.3 billion won worth of parts from the three Samsung firms.

Although Samsung and Pantech are said to be rival, the latter is not a formidable foe for the former. According to market researcher Strategy Analytics, Samsung shipped 213 million units of smartphones worldwide whereas Pantech shipped only 7.8 million. The announcement of the deal comes two months after Pantech Vice Chairman Park Byeong-yeop professed during a shareholder meeting in March he would try to attract investment this year. He promised up to 200 billion won.

By Seo Ji-eun [spring@joongang.co.kr]