Shareholders approve Samsung Group merger
Samsung Heavy Industries, the world’s third-largest shipbuilder, has announced it will absorb affiliate Samsung Engineering, whose specialty is the construction of power plants.
The company made the announcement yesterday after a meeting of shareholders at its headquarters in Seoul, nearly two months after the two companies announced an initial restructuring plan.
Samsung Heavy Industries will issue 236 new shares for every 100 Samsung Engineering shares.
The newly organized company will begin operations on Dec. 1.
Samsung Engineering reported losses of 219.8 billion won ($208.9 million) in the first quarter, then 746.7 billon won in the third quarter last year.
Ahead of the merger, the company reported an operating profit of 32.2 billion won in the third quarter of this year.
Most shareholders at yesterday’s meeting voted in favor of the merger, but the National Pension Service (NPS), a major shareholder with 5.91 percent stakes in both companies that previously opposed the plan, abstained to exercise its appraisal right, which is provided to minority shareholders to allow an opportunity to dissent from extraordinary corporate actions that adversely impact their interests.
Since the two companies announced their plan to merge in September, the stock price of Samsung Heavy Industries has fallen 21.1 percent, and Samsung Engineering shares lost 24.4 percent as of Friday.
The NPS can recoup about 80 billion won in losses over the past two months by exercising its appraisal right by Nov. 17, according to the industry.
Samsung Engineering shares closed up 7.7 percent yesterday at 58,500 won, while Samsung Heavy Industries rose 7.2 percent to 24,450 won.
Industry insiders say Samsung Heavy Industries took the first step toward becoming a world-leading company in engineering, procurement and construction, noting that the expertise and technologies accumulated by Samsung Engineering since 1970s would be a huge plus for the shipbuilder. Samsung Heavy Industries has been aggressively expanding its offshore plant business since 2010.
“We expect more than 40 trillion won in revenue by 2020,” said Samsung Heavy Industries CEO Park Choong-heum.
BY KWON SANG-SOO [email@example.com]