Arab Today, arab today samsung scraps unit merger on shareholder opposition
Last Updated : GMT 06:33:52
Arab Today, arab today
Arab Today, arab today

Samsung scraps unit merger on shareholder opposition

Arab Today, arab today

Arab Today, arab today Samsung scraps unit merger on shareholder opposition

South Korea's Samsung
Seoul - AFP

South Korea's Samsung scrapped Wednesday a merger between two major units, citing the spiralling cost of buying back stock from shareholders opposed to the deal.
Samsung Heavy Industries -- the world's third largest shipmaker -- and Samsung Engineering had announced the planned merger in September as part of a major restructuring to smooth a generational ownership succession.
Under the deal, the two firms were required to buy back shares from investors opposed to the merger.
The shipbuilding and engineering units were allowed to spend up to 950 billion won ($866 million) and 410 billion won respectively, for the share buyback.
But the Samsung Engineering shares to be returned by unhappy shareholders were valued far above the limit at 706.3 billion won, the two units said in a joint statement.
"That means we have to shell out 1.62 trillion won to complete the merger, which will put great financial strain on the firms and eventually hurt our investors," they said.
"We thus have decided to humbly accept the intention of our investors," it said, adding the merger plan had "officially fallen apart".
Samsung -- the South's top business group -- comprises dozens of units including Samsung Electronics, the world's top maker of mobile phones and TVs.
Samsung Heavy focuses on shipbuilding and offshore plants while Samsung Engineering builds onshore energy plants around the world.
The Samsung group is expected to undergo a fundamental restructuring as control of the family-run conglomerate's main business passes from ailing patriarch Lee Kun-Hee to only son Lee Jae-Yong.
Needing cash to pay what will be a massive inheritance tax bill, Lee and his siblings are expected to pare down and simplify the byzantine system of cross-holdings that link the many branches of the Samsung empire.

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