Samsung Eyes Biopharmaceutical Sector for M&As
By Kim Yoo-chul
Staff Reporter
Samsung Electronics plans to expand its M&A targets to infotainment and lifecare sectors next year.
"Samsung has more interests in lifecare and health-related segments in M&As rather than further sharpening chips and flat-screens," a Samsung official said on condition of anonimity.
Citing abundant cash-equivalent assets, the official said more actions would be materialized for such new cash cows.
As of the end of the third quarter, Samsung has some 8 trillion won in cash assets, according to the company.
"It seems clear that Samsung has changed its M&A strategy after being dropped passive stances. In addition to the group's electronics unit, other affiliates are seen to move on aggressive but selective M&As," a high-ranking industry official said, declining to be identified.
Earlier, Samsung Electronics' new CEO Choi Gee-sung said the company will seek to develop future growth engines, while solidifying its current leadership in TVs, mobile phones, chips and LCDs.
As well as lifecare and health-related sectors, Choi clarified PCs, printers, integrated circuits, home appliances, networks and digital cameras as businesses that Samsung would strive to become a global leader.
Market analysts say the strategy shift means Samsung is hoping to secure original technologies in some lagging sectors.
The Suwon, Gyeonggi Province-based consumer electronics gizmo recently signed a preliminary agreement to acquire washing machine and freezer production plants of Amica Wronki S.A. ― a 65-year-old Poland-based manufacturer of household appliances for some $70 million.
In addition to the transaction, the two sides signed a contract for the supply of washing machines and freezers by Samsung to Amica.
Final purchase agreement is expected to be signed by the end of March 2010. The deal also marks Samsung to secure its first European base in home appliances.
"As a backup measure, Samsung plans to recruit more locally-hired executives and give more responsibility to them for a better management," Park Young-joo, an analyst at Woori Investment, said.
So far, however, Samsung hasn't been paid off by a series of M&As.
Last year, it dropped for the world's biggest flash card memory chipmaker SanDisk. In 2007, it bought Tel Aviv-based TransChip for $70 million ― its first takeover over a decade ― as the tapping measure after Samsung failed to acquire AST of the United States in 1994.
"M&A games have been changed for a market leadership, securing distribution channels and owning key techs, in addition to seeking a short-term profit," Kim Chul-joong, a professor at an international finance at Seoul’s Kyunghee University, said.
"Based on such perception, Samsung is cementing post merger integration (PMI) structures by giving more roles to non-Koreans outside the peninsula."