Samsung SDI, Cheil Industries to be merged

Samsung SDI and Cheil Industries said yesterday they will merge, creating an IT corporate behemoth with 15 trillion won ($14.07 billion) in assets.

The move, hailed by many investors, hints at another round of intragroup restructuring for Samsung Group, which is striving to diversify a business portfolio that is overly concentrated on smartphones and semiconductors.

According to the companies, Samsung SDI, a battery and display manufacturer, is buying Cheil Industries, the maker of electronic materials, through a stock swap with a one to 0.44 ratio. The deal will be put up for a vote at a shareholders’ meeting on May 31 and, if approved, will be completed on July 1.

The merged entity, to be called Samsung SDI, will have around 10 trillion won in annual sales, making it the third-largest IT subsidiary within Samsung, following Samsung Electronics and Samsung Display.

The new Samsung SDI plans to grow to 29 trillion won in annual sales by 2020, Samsung SDI said in a statement. Around 14,000 employees will work for the company, while its market capitalization will amount to 10 trillion won. The stock price of Samsung SDI jumped 6.6 percent to 161,000 won yesterday, while Cheil Industries gained 5.8 percent to reach 71,700 won.

The merger, the companies said, is a win-win strategy. Samsung SDI, which provides batteries to Apple, is seeking to expand its battery business with the help of material technologies, including rechargeable power cells.

“The material technologies owned by Cheil Industries are integral to the secondary battery industry,” said an official of Samsung SDI. “We expect it will create synergy not only with mobile devices but also with the secondary battery sector such as electric cars and energy storage systems.”

Cheil Industries is expecting Samsung SDI’s customer network and marketing capability will help it find new markets for its engineering plastic products. “It was a strategic choice to be reborn in a top-notch class in energy and materials,” said Cho Nam-seong, CEO of Cheil Industries.

An official of Samsung Group said the merger is in line with Samsung Group’s business restructuring that began in the second half of last year. Last September, Cheil Industries handed its iconic fashion business to Samsung Everland as it focused on the IT sector, while Samsung SDS and Samsung SNS, two other IT affiliates, merged last year.

The merger, some analysts said, is also part of an effort to strengthen the intragroup influence of heir-apparent Jay Y. Lee, vice chairman of Samsung Electronics, who is increasing his grip on Samsung’s IT affiliates.

BY CHOI JOON-HO AND MOON GWANG-LIP [joe@joongang.co.kr]