Samsung chemical units to merge

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Samsung chemical units to merge

Samsung yesterday announced a reshuffle of its chemical units just two days after it revealed a merger between battery and display manufacturer Samsung SDI and electronics materials maker Cheil Industries.

The move comes as the nation’s largest conglomerate reorganizes to increase efficiency, making concerted efforts to search for new growth engines and become more competitive in markets other than the smartphone and mobile device market.

Samsung General Chemicals and Samsung Petrochemical said yesterday that the boards of the two units agreed to the merger at their respective meetings.

Samsung General Chemicals will issue new shares and absorb Samsung Petrochemical’s at a ratio of 1 to 2.1441. The name of the merged company will be Samsung General Chemicals.

“This decision was made in order to create more synergy among the five chemical units of Samsung,” a spokesperson for the company said.

The other three units are Samsung Total, Samsung BP Chemicals and Samsung Fine Chemicals.

The boards’ decision will need to be approved by each company’s shareholders on April 18. The merging process will be completed by June 1 if approved.

Samsung General Chemicals, established in 1988, set up Samsung Total with French chemical manufacturer Total in 2003. Samsung Total produces paraxylene, which is used in plastic bottles. Since then, Samsung General Chemicals has been the holding company of the joint venture.

The company expects that absorbing Samsung Petrochemical will help Samsung General Chemicals become the operational holding company of Samsung’s chemical units.

Samsung Petrochemical, formed in 1974, produces purified terephthalic acid. Last year, it set up a joint venture with German carbon-fiber maker SGL.

Lee Boo-jin, CEO of Hotel Shilla and Samsung Electronics Chairman Lee Kun-hee’s eldest daughter, currently owns a 33.2 percent stake in the petrochemical unit as the largest shareholder.

After the merger, Lee will gain 4.91 percent in Samsung General Chemicals, becoming the sixth-largest individual stakeholder.

Greater production efficiency is expected to take place immediately after the merger. Samsung General Chemicals will then be able to supply paraxylene and other materials produced by its subsidiary Samsung Total for Samsung Petrochemical.

“Through synergy with Global Chemicals, we will take a leap as a global general chemical company with future competitiveness,” said Chung Yoo-sung, CEO of Samsung Petrochemical.

“The two units pushed for a merger to align their growth strategies and this will establish a solid growth foundation,” said Sohn Seog-weon, CEO of Samsung General Chemicals.

BY song su-hyun []

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