Samsung Group announced Wednesday it will sell four chemical and defense units to Hanwha Group in a deal estimated at 1.9 trillion won (US$1.72 billion).
   
Samsung said it will sell its defense affiliate Samsung Techwin Co. and chemical unit Samsung General Chemicals Co. to Hanwha, another South Korean family-run conglomerate whose main businesses include defense and solar power. 
  
The sales will be completed by the first half of next year, Samsung said. Hanwha's board of directors approved the deal Wednesday morning.
  
Analysts saw the sale as part of Samsung's reorganization effort, which ultimately aims for smooth succession of Lee Kun-hee's $13 billion fortune to his son and daughters. 
   
"It means that Samsung doesn't consider chemical and defense as core businesses, that Lee's children don't feel confident about keeping them under their wings, either," said Park Joon-sun, an analyst at Kiwoom Securities Co.
  
Park noted how Samsung Techwin has lost steam in growth and swerved in and out of the red for the past several quarters. Its third-quarter operating profit slid 82 percent to 5.2 billion won.
  
"It'll be a good done deal for Samsung, selling them at an adequate price, but I'm not so sure if it's as good for Hanwha," Park added. 
   
Samsung will sell a 32.4 percent stake in Samsung Techwin for 840 billion won, as well as a 57.6 percent stake in Samsung General Chemicals for 1.06 trillion won.
   
Two other affiliates, Samsung Thales Co. and Samsung Total Petrochemicals Co., were automatically included in the sale-acquisition deal since they are half-owned by the companies being sold to Hanwha.
  
Hanwha will jointly control these two companies with France-based Thales Group and Total S.A, which owns the other half of the stakes.
   
Hanwha will have the controlling share of 81 percent in Samsung General Chemicals after taking over the stakes held in the firm by Samsung Techwin.
  

The two defense arms will be taken over by Hanwha Corp., the holding firm of the group, and the chemical affiliates will be bought by Hanwha Chemical and Hanwha Energy Corp., Samsung said.
   
Samsung Electronics Co., Samsung C&T Co., and Samsung Securities Co. currently hold shares in Samsung Techwin, while Samsung General Chemicals is owned by Samsung C&T, Samsung SDI Co.
and Samsung Electro-Mechanics Co.
  

Samsung C&T, meanwhile, will maintain its 18.5 percent stake in the chemical unit for business between Hanwha and Samsung.
  
"We plan to establish a comprehensive defense-business portfolio to expand market presence and seek synergy in the precision machinery sector," Hanwha said.
   
Hanwha Chemical said separately it hopes to diversify its product lineup and expand its competitiveness in the petrochemical sector through the deal to secure a stable source of profit.
   
Hanwha, South Korea's 10th-largest conglomerate, has been going after military-related businesses, such as ammunition production, since being designated a defense firm in 1974.
   
Samsung Techwin produces engines for FA-50 light attackers, as well as Korea Utility Helicopter (KUH). Samsung Thales is a mass producer of military goods, such as thermal imagery devices.
  
Samsung Techwin also owns a 10 percent stake in Korea Aerospace Industries Ltd. (KAI), South Korea's sole aircraft manufacturer and total system integrator.
   
Samsung General Chemicals, meanwhile, had transferred most of its business to Samsung Total, a gasoline producer, and acted as a
holding firm of the group's chemical affiliates.   
   
Samsung has been speeding up its structural reorganization amid de facto head Lee Kun-hee's hospitalization since mid-May after suffering a heart attack. His vacancy gave urgency to reviewing the group's business strategy ahead of a managerial transfer to his children and focusing on mainstay business for the future.
   
With the only son Lee Jay-yong effectively serving as the chief, corporate watchers are also closely following a large-scale personnel reshuffle and business restructuring expected to be announced next month.
  
The sales of the affiliates will have little impact on the future of Samsung's ownership structure, analysts said, given the few stakes in the units owned by Lee's children.  
   
"The sale is fairly insignificant for Samsung. The affiliates are at the bottom of the group's cross-ownership chain," said Lee Sang-hun, an analyst at Hi Investment & Securities Co. 
   
Only Lee Boo-jin, the eldest daughter of chairman Lee, has a stake in any of the affiliates, with a 4.95 percent stake in Samsung General Chemicals, which will be handed over to Hanwha. 
  
"(The sale) reflects that Samsung is nearing the final phase of its management shake-up, to establish a footing for Lee junior to succeed his father's businesses," Lee of Hi Investment said, leaving open the possibility of another attempt to merge shipbuilding arm Samsung Heavy Industries Co. and Samsung Engineering Co., which deals with overseas project management. 
  
Last week, the two Samsung affiliates announced their merger plan had been cancelled due to opposition from their shareholders. (Yonhap)