Samsung Electronics Signals Next Year's M&A with Future Business Planning Team

Samsung Electronics Without Major M&A for 7 Years
Opening New Business Opportunities Through M&A Breakthroughs

Samsung Electronics is forming a new organization called the Future Business Planning Group to discover new businesses, raising expectations that there will be tangible results in corporate mergers and acquisitions (M&A), which had seen no progress for several years, by next year.

On the 28th, the business community revealed that Samsung Electronics announced plans to establish the Future Business Planning Group led by Vice Chairman Jeon Young-hyun, and it is expected that the appointment of executives responsible for related tasks and organizational restructuring will be completed by next week at the latest. Given that the group leader holds the rank of vice chairman and the department reports directly to the CEO, the initial team size is expected to be around 10 to 20 members, with the possibility of expansion as the business becomes more concrete.

The main task is to discover new businesses that will be Samsung Electronics' future growth engines and to consolidate capabilities to nurture them. This includes M&A, one of the fastest ways to grow new businesses. A past organization with a similar nature to the Future Business Planning Group is the New Business Promotion Group, which was launched in 2010 and within five months discovered and announced Samsung’s five new growth businesses?solar power, light-emitting diodes (LED), secondary batteries, bio, and medical devices?and developed them into cash cows.

For Samsung Electronics, M&A for new businesses has long been one of the unresolved tasks that have not produced proper results. Vice Chairman and CEO Han Jong-hee publicly stated in January 2021 that Samsung Electronics would pursue meaningful M&A within three years. However, despite having the financial capacity and willingness to conduct large-scale M&A, no significant achievements have been made.

The last large-scale M&A Samsung Electronics carried out was the acquisition of Harman in 2017 for $8 billion (approximately 9.376 trillion KRW at the time), aimed at strengthening future growth areas such as automotive electronics and audio businesses. Considering that the acquisition process began in November 2016, it means that there has effectively been no major M&A deal for seven years. Chairman Lee Jae-yong, acting as Samsung Electronics’ top decision-maker in place of the late Chairman Lee Kun-hee, who was incapacitated at the time, successfully completed 14 M&A deals from 2014 to 2016.

Jeon Young-hyun, Vice Chairman and Head of Future Business Planning Group at Samsung Electronics

Since his inauguration as chairman at the end of October last year, despite the 'shackles' of judicial risks, Chairman Lee has expanded his connections by meeting with CEOs of global companies using his extensive overseas network. Accordingly, there is a growing interpretation that the recent Samsung Electronics executive reshuffle, where Vice Chairman Han stepped down from his concurrent role as head of the Visual Display Business Division and established the Future Business Planning Group directly under the CEO, signals an imminent announcement of significant M&A by Samsung Electronics.

Samsung Electronics has more than enough 'ammunition' reserved for M&A. According to the consolidated quarterly report as of the end of September, Samsung Electronics has cash and cash equivalents available for immediate use amounting to 75.1 trillion KRW. Highly liquid short-term financial products also total nearly 18 trillion KRW.

While bringing cash held by Samsung Electronics’ overseas subsidiaries and affiliates in the U.S., Europe, and China back to Korea involves complex factors such as foreign exchange risk, funds located overseas can be directly used for overseas corporate M&A. Samsung Electronics is estimated to invest a total of 52.1 trillion KRW in facilities this year through proactive investments in the semiconductor business, and it has already drawn 20 trillion KRW from Samsung Display, which has sufficient domestic cash. Therefore, there is ample additional financial capacity available. The business community views that Samsung Electronics aims to become the number one in the system semiconductor sector by 2030 and is also strengthening its automotive electronics business, making the possibility of pursuing M&A in related fields high.

This content was produced with the assistance of AI translation services.