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Samsung Electronics sells assets in defence, chemical subsidiaries amid declining profits

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Samsung Electronics, reeling under huge losses primarily due to its smartphone business, has today announced in a public disclosure, that it is selling assets in its defence and chemical subsidiaries to Hanwha Corporation.

In two separate disclosures, Samsung has announced that it will be selling a total of 3,016,705 Samsung General Chemicals Co. Ltd.  shares to Hanwha Chemical Corporation and Hanwha Energy Corporation. Samsung General Chemicals Co. Ltd. is a subsidiary of the larger Korean conglomerate, Samsung Group.

Similarly, Samsung will be selling a total 13,526,935 shares of Samsung TechWin, another Samsung Group subsidiary which handles its defence deals.

The purpose of both these decisions, as mentioned by Samsung in its disclosure says,

The purpose of asset sale is secure capital resources for investments in new businesses and to strengthen the Company’s core competency.

As far as Samsung TechWin is concerned, not only Samsung Electronics, but Samsung C&T, Samsung Securities, Samsung Life Insurance, and Samsung SDI also plan to sell their equity in the defence firm.

Samsung Group is also transferring its own stakes in the two units, as well as additional shares in Samsung Thales and Samsung Total Petrochemicals, to Hanhwa Corp. Combinig all, the total value of this deal stands at roughly 1.9 Trillion Won (USD 1.72 Billion).

Analysts say that this asset sale is primarily triggered by Samsung dismal show in the third quarter of 2014. Its Q3 2014 profits, as compared to previous year, well by a sharp 49%, to just 4.2 trillion won ($4 billion). This downfall is largely credited to rise of new smartphone brands like Xiaomi, offering flasghip devices at 1/4th of Samsung’s prices.

Editor-at-large and co-founder at The Tech Portal. He is a tech enthusiast with interests in new-age technology fields like Ai, Machine Learning, AR/VR, Outer Space and related stuff. Drop him a mail anytime, very reachable.

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