Samsung Divestment – Down fall or Rain fall
Samsung – One of the largest multinational conglomerates from Korea is going for divestment. Samsung Group with its headquarters in Seoul, South Korea has numerous businesses spread across the globe. The group companies are promoted under the brand name of Samsung. Samsung Electronics is one of the vibrant and is the world’s largest companies in terms of sales. The group has floated many noteworthy entities and its ship building concern, Samsung Heavy Industries takes second place in the world. The group has diversified its interests in electronics, insurance, entertainment, heavy industries and investment banking among others.
It is perceived that Samsung Group’s disinvestment comes in tune to the alert given by administrators and politicians of the country that small and middle enterprises may suffer due to unsupportive maintenance, repair and operation activities of large and multinational companies. Samsung Group has confirmed that is has picked up Interpark as a successful bidder for its procurement wing, iMarketKorea Inc. Interpark is one of the leading online shopping malls in Korea. The deal is worth about $342 million which comes out to be 58.7 % of the share held by Samsung group companies.
Surprisingly, the same pace of divestment measures are not followed by other big businesses such as LG or SK. The deal is likely to finalize in the month of November, 2011. As per the deal, Samsung guarantees Interpark revenue generation to the tune of 2 trillion Won per annum through iMarketKorea. iMarketKorea was setup in the year 2000 by Samsung to cater operation and maintenance services to small business clients. Interpark in association with Korea Venture Business Association and private equity firm HQ goes for this new ambitious deal. Interpark is successful in defeating other major bidder, Kohlberg Kravis Roberts Co and MBK Partners.
As an immediate reaction to the deal, stocks of iMarketKorea and Interpark have slipped by 2 to 3% on exchange trade. Even though there is no immediate effect in business functioning of the Samsung, it will be interesting to find the impact on Samsung group as a whole and Samsung Electronics in particular. By selling the major chunk of the iMarketKorea to Interpark and its allies, Samsung Group can better protect its brand image. It may help Group in the long run by being able to focus on its core competency and at the same will be able to draw maximum out of goods and maintenance services.
Samsung group was partitioned for the first time during 1960’s with Cho Hong-jai taking Hyosung group’s ownership. Second major partition happened during 1990’s with Hansol coming under the leadership of founder’s eldest daughter. Shinsegae group came under founder’s fifth daughter and CJ ownership went to founder’s eldest son. The current Samsung Group is led by founder’s third son. After separation and formation of groups, the deviated groups will not hold any liability in terms of business and it will be attributed to Samsung Group only. The group draws its continued inheritance right from its launch in the year, 1938 by founder Lee Byung Chull.
Having established its remarkable presence in the world of electronics especially in the new generation of mobile phones, it will be interesting to watch the new twists and turns of the Samsung Group in the highly competitive global market.