On the 28th, when Samsung Electronics announced that it recorded 61.5 trillion won in sales and 9.5 trillion won in operating profit in the fourth quarter of last year, the flag of Samsung Electronics’ Seocho office building in Seocho-gu, Seoul is flying in the wind. Photo = Newsis
Samsung Electronics, which entered emergency management due to the absence of the total number, announced the possibility of a large-scale merger and acquisition (M&A). In particular, it is observed that under-floor work related to M&A is already underway, showing the specific timing and the considerable proportion of investment. It is noteworthy that the announcement came just two days after Samsung Electronics Vice Chairman Lee Jae-yong issued an imprisonment message saying, “We must fulfill the corporate duty of investment and job creation.”
“I will go on a large-scale M&A within 3 years”
“Samsung Electronics has continuously considered M&A targets very carefully over the past several years,” said Choi Yun-ho, president of Samsung Electronics’ management support office (CFO), in a conference call following the announcement of 4Q results on the 28th. He added, “It is difficult to specify the timing of implementation due to uncertain internal and external conditions, but there is a high possibility of realizing a meaningful M&A within this policy period based on what has been prepared so far.” Samsung Electronics announced a shareholder return policy that will proceed from this year to 2023, which implies that M&A can be achieved within this period. This is the first time since Samsung Electronics acquired Harman, an automotive electronics company, in 2017. President Choi is one of the closest close friends known as Lee’s regret.
Some say that Samsung Electronics’ mention of this M&A is unusual. It is true that there was a lot of concern about mid- to long-term management strategies both inside and outside of the Samsung Group after the absence of an owner after Vice Chairman Lee was imprisoned in court on the 18th at the ruling of the Gukjeong Nongdan. However, with this announcement, there are also observations that Vice Chairman Lee’s management in prison is expected to proceed in an active manner in the future. It is a public opinion both inside and outside the business world that this M&A announcement must have been made in sympathy with Vice Chairman Lee, who is currently in prison. Vice-Chairman Lee emphasized in an imprisonment message on the 26th, “Regardless of the situation in which I am facing, Samsung should continue to follow the path it should go,” and “It should be faithful to the corporate duty of investment and job creation.”
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There are enough real shots behind Samsung Electronics’ aggressive M&A and investment. As of the fourth quarter of last year, Samsung Electronics’ net cash (cash-borrowings) amounted to 104.5 trillion won. An increase of 10 trillion won from a year ago. This means that the funds required for M&A are sufficient. On this day, President Choi said, “Continuing cash increase is a burden on the company’s management side,” and it seems that it will become a bigger’big deal’ than when it took over Harman, a US electric electronics company with a cost of 9 trillion won in 2017.
Harman, a subsidiary of Samsung Electronics’ auto parts and electrical equipment, unveiled Digital Cockpit 2021 at the online showcase Harman Explorer 2021, which was held prior to CES 2021, the world’s largest consumer electronics fair on the 8th of last month.Digital Cockpit was acquired by Samsung Electronics in 2017. It is a device that consists of electronic devices that control the vehicle in front of the driver’s seat and passenger’s seat, developed jointly with Harman, an American electrical equipment company. Photo = News 1
Although I did not comment on specific M&A candidates, automobile electric equipment (electronic equipment) companies, which are considered as promising businesses, are emerging as promising targets. The recent appointment of Samsung Electronics as vice president of the business support TF Lee Seung-wook (53), who was deeply involved in the acquisition of Harman, as the head of the electronics business team, is a key factor in raising the possibility of additional M&A in the electronics field.
In the case of automotive semiconductors, demand is expected to increase rapidly as the automotive industry is expected to reorganize in the future, focusing on eco-friendly and electric vehicles. NXP in the Netherlands and STMicroelectronics in Switzerland, which are prominent in automotive system semiconductors, are on the way to Samsung Electronics’ M&A candidates.
No Geun-chang, head of the Hyundai Motor Securities Research Center, said, “Since Samsung is choosing the electronic field as a food for the future and has a bright future outlook, will Samsung also consider this?”
Kim Dong-wook reporter [email protected]
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