Samsung reorganization, sell Techwin to Hanwha Group

The latest news from Yonhap News, South Korea largest electronics manufacturer Samsung Group plans to sell its four subsidiaries in petrochemical and military industries. These companies are Samsung Integrated Chemical, Samsung Total, Samsung Techwin and Samsung Thales, these companies will be taken over by Hanwha Group, the total transaction amount exceeds 661 billion won ($596 million). According to the report, this is the first time Samsung sell its major non-core business to other company after the Asian financial crisis dated back to 1997.

Samsung Hanwha

According to the report, Samsung group began to adjust business on subsidiaries including electronic, financial, heavy-industry since 2013. Unlike the past adjustment, which adopted strategies of combining and merging across through different sub-divisions, this time Samsung decides to sell its non core business to improve its competition. Analysts believe that Samsung may have started undertaking comprehensive restructuring, reorganization of the group including the areas of electronics, finance and services, as well as heavy industry. It is reported that the deal will complete after the verification process information, it's expected to end in next year Q2.

Techwin is one of four subsidiaries from Samsung, Techwin's main business including compressor, SMT, security equipment. Samsung's reorganization has a major impact on video surveillance market. Over the past decade, the Samsung Techwin has fast rapid growth, it ranked as fifth largest video surveillance manufacturer in 2013. For this takeover, IHS Corp. Chief Analyst - Jon Cropley said, "In 2013, the price of video surveillance equipment experienced a significant decline, mainly due to the strong competition from China, and Chinese manufacturers kept increasing the market share is another factor."

After this reorganization, Samsung can devote much energy and money on other business such as the fast growing smartphone business. On the other hand, after this takeover, Hanwha group can expand its business scope through entering into basic military market. Over the next five years, Gropley believes the company can reach an average growth rate of 10%. However, the Hanwha Group has to face a very scattered, but highly competitive market.