Samsung Heavy Industries Co. share price up, to merge with Samsung Engineering

Samsung Heavy Industries Co., the third-biggest shipbuilder in the world, is to merge with Samsung Engineering Co. by the end of the year in a deal estimated at about 2.5 trillion won (~$2.5bn). The move comes as the Samsung conglomerate, or chaebol, is restructuring major businesses in light of new Korean chaebol regulation and a possible inheritance procedure.

“Samsung Group is making adjustments to its various businesses, looking for either vertical integrations or moving pieces around for other purposes,” Chung Sun-sup, CEO of Chaebul.com, said for Retuers. “The key purpose is to lay the groundwork that will make it easy for the Lee heirs to divide the inherited assets or separate out their own turfs within the group after they take control.”

Shareholders Samsung Engineering Co. will get 2.36 shares in Samsung Heavy Industries Co., as about 94 million new shares will be issued by Heavy at the price of KRW 26 972. This price values the merger at ~$2.5bn.

The merger will add Samsung Heavys, shipbuilding, construction and energy businesses to Samsung Engineerings vast portfolio, which itself includes energy, manufacturing, construction and engineering. As reported by the Financial Times, Samsung Heavy said that the merger between the businesses means “we are now able to provide total solutions spanning both land and sea for clients including oil majors”.

Samsung Heavy Industries Co. Ltd was 6.24% up to close at KRW 28 950 per share today, marking a one-year change of -29.65% and valuing the company at KRW 6.30tn (~$6.24bn). According to the Financial Times, the 27 analysts offering 12-month price targets for Samsung Heavy Industries Co. Ltd have a median target of KRW 34 000, with a high estimate of KRW 45 000 and a low estimate of KRW 23 000. The median estimate represents a 17.44% increase from the last price of KRW 28 950.