By Kim Yoo-chul
The so-called big deal between Samsung and Hanwha Group is evidence of a leadership changeover from fathers to sons at the two chaebol.
With Samsung Chairman Lee Kun-hee in hospital, his only son Lee Jae-yong is said to have masterminded the deal aimed at selling four noncore businesses to Hanwha.
Kim Dong-kwan, the eldest son of Hanhwa Chairman Kim Seung-youn, completed Hanwha's end of the deal, moving it up the ranks of conglomerates. The senior Kim is now free after spending a year in jail.
Both the chairmen's sons went to Harvard Business School.
"Because the health of the Hanwha chairman was bad, his oldest son took on the role as chief negotiator for the Samsung proposal. He held face-to-face meetings with Lee Jae-yong," said a source.
"For Samsung, this was a good decision as the group has been realigning its structure to focus on consumer electronics, finance and construction. The timing was perfect. The power succession will speed up," he added.
Samsung Electronics, Samsung C&T and four other Samsung units decided on Nov. 26 to sell their stakes in Samsung Techwin and Samsung General Chemicals for a total of 2 trillion won to Hanwha Group, meaning that Samsung will drop its defense and chemical businesses.
This is the first time for Samsung, Korea's top conglomerate, to unload group affiliates since the Asian Financial Crisis in late 1998, and attention has shifted to who helped broker the deal
Officials at Samsung and Hanwha affiliates said the sons, Lee at Samsung and Kim at Hanwha SolarOne, made the final call on the deals, citing the ongoing process of the transition of power to the third-generation within the conglomerates.
"Hanwha heir Kim Dong-kwan persuaded the chairman to purchase the Samsung affiliates, with Samsung heir Lee supporting the proposal," said an official at one Hanwha affiliate by telephone Thursday.
He said much like Samsung, Hanwha Group is gradually transferring its leadership to a new generation. "This deal will help both the junior Lee and Kim further boost their image and get them better visibility. We are seeing changes," he said.
Lee Jae-yong has been running the nation's most-powerful conglomerate since his father long-time Chairman Lee Kun-hee was hospitalized in May following a heart attack. He has been loosening Samsung's complex cross-ownership structure.
Hanwha approached Samsung to purchase Samsung Thales in early August to expand its defense business. Samsung later suggested Hanwha purchase Samsung's chemical affiliate and Samsung Techwin, which holds half the shares in Samsung Thales.
But the process had stalled as Hanwha was reeling from losses at its chemical business amid a steep fall in oil prices.
The junior Kim handles Hanwha's solar business, which the group identified as one of its next revenue streams. He holds half the shares in Hanwha S&C — which controls Hanwha Energy — that will purchase Samsung's defense unit.
"Hanwha Energy will increase its influence on the group and that means the younger Kim will have a more increased role. Hanwha S&C may be acquired by Hanwha Corp. as part of a plan to shift the power to the third-generation," said the Hanwha official. The junior Kim holds a 4.44 percent stake in Hanwha Corp.
The so-called big deal between Samsung and Hanwha Group is evidence of a leadership changeover from fathers to sons at the two chaebol.
With Samsung Chairman Lee Kun-hee in hospital, his only son Lee Jae-yong is said to have masterminded the deal aimed at selling four noncore businesses to Hanwha.
Kim Dong-kwan, the eldest son of Hanhwa Chairman Kim Seung-youn, completed Hanwha's end of the deal, moving it up the ranks of conglomerates. The senior Kim is now free after spending a year in jail.
Both the chairmen's sons went to Harvard Business School.
"Because the health of the Hanwha chairman was bad, his oldest son took on the role as chief negotiator for the Samsung proposal. He held face-to-face meetings with Lee Jae-yong," said a source.
"For Samsung, this was a good decision as the group has been realigning its structure to focus on consumer electronics, finance and construction. The timing was perfect. The power succession will speed up," he added.
Samsung Electronics, Samsung C&T and four other Samsung units decided on Nov. 26 to sell their stakes in Samsung Techwin and Samsung General Chemicals for a total of 2 trillion won to Hanwha Group, meaning that Samsung will drop its defense and chemical businesses.
This is the first time for Samsung, Korea's top conglomerate, to unload group affiliates since the Asian Financial Crisis in late 1998, and attention has shifted to who helped broker the deal
Officials at Samsung and Hanwha affiliates said the sons, Lee at Samsung and Kim at Hanwha SolarOne, made the final call on the deals, citing the ongoing process of the transition of power to the third-generation within the conglomerates.
"Hanwha heir Kim Dong-kwan persuaded the chairman to purchase the Samsung affiliates, with Samsung heir Lee supporting the proposal," said an official at one Hanwha affiliate by telephone Thursday.
He said much like Samsung, Hanwha Group is gradually transferring its leadership to a new generation. "This deal will help both the junior Lee and Kim further boost their image and get them better visibility. We are seeing changes," he said.
Lee Jae-yong has been running the nation's most-powerful conglomerate since his father long-time Chairman Lee Kun-hee was hospitalized in May following a heart attack. He has been loosening Samsung's complex cross-ownership structure.
Hanwha approached Samsung to purchase Samsung Thales in early August to expand its defense business. Samsung later suggested Hanwha purchase Samsung's chemical affiliate and Samsung Techwin, which holds half the shares in Samsung Thales.
But the process had stalled as Hanwha was reeling from losses at its chemical business amid a steep fall in oil prices.
The junior Kim handles Hanwha's solar business, which the group identified as one of its next revenue streams. He holds half the shares in Hanwha S&C — which controls Hanwha Energy — that will purchase Samsung's defense unit.
"Hanwha Energy will increase its influence on the group and that means the younger Kim will have a more increased role. Hanwha S&C may be acquired by Hanwha Corp. as part of a plan to shift the power to the third-generation," said the Hanwha official. The junior Kim holds a 4.44 percent stake in Hanwha Corp.
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