|(from left) Lee Jay-yong, Lee Boo-jin, Lee Seo-hyun|
With less than two months until Samsung Group carries out its regular year-end reshuffling, major changes appear highly likely.
But this time, the focus is not on individuals but on how the corporate structure of the world’s largest electronics company may change in general.
The biggest change is that Samsung will most likely streamline its operations to form three central pillars of business ― electronics, non-electronics and finance ― that will be broadly headed by siblings Jay-yong, Boo-jin and Seo-hyun, according to industry watchers.
The eldest, Jay-yong, is vice chairman of Samsung Electronics, while Boo-jin heads Shilla Hotel and Seo-hyun is senior executive vice president of Cheil Industries.
The electronics and finance divisions will go to the son, while eldest daughter Boo-jin is likely to handle non-electronics including the hotel and construction, and the youngest Seo-hyun will continue to flaunt her fashion savvy, watchers say.
To ensure this power shift, more consolidation is expected, a move aimed partly to concentrate on core competence and partly to avoid the kind of sibling rivalry Samsung’s owner Lee Kun-hee had experienced with his own older brother.
Cheil Industries’ handover of its fashion unit to Samsung Everland and the merger between Samsung SDS and SNS ― the latter’s de facto operator being Jay-yong ― were two signs this year indicating the advent of something bigger.
Cheil will now concentrate on electronics materials, and has acquired a number of related companies including Novaled, a Germany-based OLED technology provider.
But this won’t mean Seo-hyun will now have less say, as her role has been and will always be to control Samsung’s fashion and design segments, Samsung officials said.
“It only means there will be an adjustment to allow each sibling to focus on what they do best,” one official added.
All three of the younger Lees currently hold stakes in Everland. Jay-yong holds 25.1 percent, and Boo-jin and Seo-hyun each own 8.37 percent.
“Future consolidations may involve some equity transactions between the Samsung children, since each must take a carefully coordinated portion of Samsung that centers on Samsung Everland, the de facto holding company,” said Jung Sun-sup, head of Chaebul.com, one of the nation’s top portals devoted to news and data on conglomerates.
SDS, SNS merger to reinforce Lee Jay-yong’s leadership
Samsung SDS, which had so far kept a low-profile among the Samsung affiliates, is another player of the plans to give Lee Kun-hee’s heir a leg-up in his upcoming succession of the Samsung Empire.
SNS, a network solutions company, is a company Lee Jay-yong had been controlling for a long time. It once went under, but now Samsung SDS, one of the most promising of Samsung affiliates, has announced it would be acquiring SNS.
“This is why SDS was joined with SNS, so that Samsung can eventually claim the success of SNS when the lines become blurry between the two,” said one source.
With the merger, the Samsung heir’s stake in Samsung SDS will increase to 11.26 percent from the current 8.86 percent.
In order to eventually provide the younger Lee with the managerial support he will need to lead Samsung, SDS is now being honed to become a global software leader.
As a part of this blueprint, SDS has been quietly acquiring several software companies of late, including Nuri Solution and TMAX Core.
Construction biz to align under Lee Boo-jin
Another consolidation that can be expected is between Samsung Engineering and Samsung Corp.
Experts believe it is only a matter of time before the two merge, as criticism has long followed them for having largely overlapping business units.
And since Samsung was created out of Samsung Corp., the merger would likely lean in its favor, industry watchers said.
Samsung Corp. this year acquired a tiny stake in Samsung Engineering -― about 2 percent -― and many believe this is the signal that the much-anticipated merger has been put into motion.
The transaction would most likely give Boo-jin bigger support since she is currently a senior adviser to Samsung Corp. and also holds more than a 30 percent stake in Samsung Petrochemical.
An entity formed between a marriage between the two would most likely form the core of the non-electronic unit to be given to Lee Kun-hee’s eldest daughter.
By Kim Ji-hyun (email@example.com)