A step toward symbiotic growth
Mergers and acquisitions (M&A) are in trouble. At the end of last year, Samsung Group announced that four of its subsidiaries in petrochemical and defense are to be sold to Hanhwa Group. Four months have passed, but the negotiation is in stalemate.
According to media reports, the main cause is the opposition of the labor unions of respective Samsung subsidiaries mentioned in the sale. The big deal was made to enhance corporate competitiveness, and Samsung and Hanhwa have made agreements through inspections. However, the unions and employees are concerned about employment stability and uncertainty of their future. Due to their opposition, the sale process is not concluded.
Let’s think once again whether selling a business or M&A deserves such criticism. We still vividly remember the foreign currency crisis and IMF bailout. The conglomerates that recklessly expanded their businesses to various sectors were named as the main culprit for the unprecedented national crisis. We have witnessed the tragedy of bankruptcies from expanding businesses without taking profit structure and competitiveness into account and having a complicated financing structure among affiliated companies.
The anxiety of the employees and labor unions is understandable. However, Hanhwa has reportedly promised them guaranteed employment as well as equivalent wages and benefits. Moreover, Hanhwa Group specializes in petrochemical and defense industries, and Hanhwa’s takeover could enhance competitiveness and provide an opportunity for greater growth.
If the labor-management discord over the sale is not settled early on, both parties would suffer a great loss. The conflict management is still not sophisticated, and when it becomes a political issue, the discord often spreads to Yeouido politics. When the timing for resolution is missed, reasonable discussion and realistic calculation between the involved parties lose priority, and it could lead to unintended outcomes.
I would like to sincerely recommend the labor unions and employees to understand the situation calmly and seek ways for mutual prosperity with the company. Some companies suffer after being sold, but we should not forget that there are many success cases, such as SK Hynix.
Park Ho-hwan, Dean of Ajou University Graduate School of Business