Cheil Industries, despite its roots in fashion, will be giving up its money-losing apparel unit to whole-heartedly focus on electronics materials for Samsung Electronics and other key Samsung affiliates.
The unit is to be sold to Samsung Everland for 1.05 trillion won ($985 million).
The move, which has been highly anticipated for a while since Samsung has been noticeably anxious to hone Cheil’s core competence, has raised speculation about what’s next, including with regard to relations between the Samsung sisters, Hotel Shilla president Lee Boo-jin and Cheil Industries senior executive vice president Lee Seo-hyun.
The elder Lee is in charge of business strategy at Samsung Everland, the de facto holding company for Samsung, while Lee has been mostly involved in fashion.
“This could mean that Lee Boo-jin is getting the upper hand since her role at Everland will gain more authority, or on the other hand, that her younger sister is being groomed to fulfill her own role at Everland now that Cheil has become closer to it than ever,” said one industry watcher.
Chemicals and material manufacturing for Samsung, mostly Samsung Electronics, will now be the new focus of Cheil Industries, whose business portfolio is comprised mainly of such operations, with fashion taking up less than 30 percent. The unit also has been losing money, recording a 5.5 billion won deficit in the second quarter.
According to industry watchers, Cheil had considered selling the fashion unit to a completely different company, but decided to keep it within Samsung, mostly for the sake of synergy and job security.
The fact that Samsung is not the larger shareholder also may have had something to do with the decision, industry watchers said, as the National Pension Service is the largest shareholder with a more than 10 percent stake.
“This decision reflects our will to focus on core competence to achieve a longer-term goal of becoming a global player in material manufacturing,” said Park Jong-woo, head of Cheil’s material business unit.
Aside from the sales of the fashion unit, Cheil had steadily been preparing to shift gears. Earlier this year, it purchased a near 50 percent stake in Novaled, a prominent German maker of OLED materials.
By Kim Ji-hyun (email@example.com)