New Samsung C&T to be launched today

By Choi Kyong-ae

A new entity formed by a merger between Samsung C&T and Cheil Industries will be launched today, and is expected to be a de-facto holding company for the nation’s biggest conglomerate.

After the name for the new enterprise is announced later today, Samsung Group will have completed a crucial step toward accomplishing its succession plan to Lee Jae-yong from his ailing father Lee Kun-hee, analysts said Monday.

Samsung C&T said the combined entity will aim for 60 trillion won ($51 billion) in sales by 2020, more than doubling the 28.4 trillion won it did by the end of 2014.

It aims to attain a pretax net profit of 4 trillion won by that year.

Along with Samsung Electronics, Samsung C&T is expected to become one of two pillars buttressing the group.

“We will achieve the target by maximizing synergy between four businesses ― construction & engineering, trading & investment, fashion, and resort & construction ― and developing new growth drivers such as biotechnology,” it said.

Samsung C&T’s main businesses are construction, general trading, fashion and leisure and biotechnology. It expects its sales to grow annually by more than 10 percentre than 10 percent annually.ral trading, fashion and leisure.er Corp.ggest company listed on the nation'.

The merged entity will have market capitalization worth 27 trillion won, making it the fourth-largest company listed on the nation’s main bourse, after Samsung Electronics, Hyundai Motor and Korea Electric Power Corp.

New shares in it will start trading on Sept. 15.

But all the worries are not over for the country’s biggest conglomerate because the U.S. activist fund Elliot Associates, a major shareholder of Samsung C&T, may still take action against the merger of the group’s two major affiliates, analysts said.

“It is difficult for Elliott to file a suit against the merger itself at the current stage. But they are unlikely to just wait and see how Samsung C&T will develop a new growth engine and enhance its shareholder value,” Byung Seong-jin, head of the research center at BNK Investment & Securities, said Monday.

Elliott has said that it will not support Samsung Group’s plan to solidify the Lee family’s grip on Samsung Electronics because Samsung C&T has a 4.2 percent stake in the tech giant and Cheil Industries is 42 percent owned by the Lee family.

In a regulatory filing in July, Elliott said it held a total 7.12 percent stake in Samsung C&T.

Trading of Samsung C&T shares is suspended at 48,100 won from Aug. 27 to Sept. 14. The new stock will resume trading on Sept. 15 on the main Korea Exchange.

As for the ultimate goal of Elliott, analysts expected the U.S. fund to demand higher dividends from the merged entity as it still holds a stake in Samsung C&T.

“In the long term, Elliott will seek higher dividends from the new Samsung C&T,” Byun said.