Samsung Prepares for a Large-Scale Acquisition as It Piles Up Billions in the South Korean HQ
Samsung is allegedly preparing for a major, long-awaited acquisition that was previously complicated by the internal dynamics of the company’s leadership. Reports indicate that the company is investing billions of cash assets into its South Korean headquarters, possibly in preparation for a large-scale merger.
Samsung’s Cash Hoard Hints at an Imminent M&A
The financial preparations are primarily linked with a huge cash buildup in a relatively short period. Earlier this month, South Korean sources highlighted that in the fourth quarter of last year, Samsung divested all its remaining shares in the Dutch equipment manufacturing company ASML. This divestment included approximately 1.58 million shares, which amounts to a 0.4% stake.
Samsung pulled out a significant $4.5 billion profit from the sale, eight times its initial investment in 2012. Other than that, the company is also repatriating funds from its overseas subsidiaries. In fact, last year, Samsung headquarters cash assets saw a staggering 169% yearly rise, a move likely linked to the company’s ambitions to expand.
In the past few years, Samsung executives have hinted at a significant M&A, with Vice Chairman Han Jong-hee hoping to announce a plan this year. After all, Samsung’s last big acquisition was Harman, for $8 billion seven years ago, in 2017.
Samsung’s Leadership Turmoil Prevented the Company from Pursuing Any Major Acquisitions
For the past decade or so, Samsung has struggled to expand, primarily due to leadership instabilities. Jay Y. Lee, the heir to the Samsung empire and de facto leader, was at the center of a major corruption scandal that greatly impacted South Korea’s overall business landscape.
In 2017, Jay was found guilty of bribing former South Korean President Park Geun-hye and her close confidante. These bribes were aimed at gaining government support for a controversial merger between two Samsung affiliates in 2015. This merger was important for Jay to smoothly inherit control of Samsung from his father.
However, the scandal soon led to Jay’s arrest, and Samsung refrained from pursuing any major mergers or acquisitions to avoid attracting scrutiny. Now that Jay has been acquitted of the fraud charges, he could lead the company more actively.
This is all we know for now, but rest assured that we will keep you updated as new information becomes available.
via: Korea JoongAng Daily
