Samsung denies rumors of merger between heavy industry units

Samsung Engineering and Samsung Heavy Industries on Thursday denied that they were seeking to merge again after last year’s failed attempt.

“We are not considering a merger plan,” the two companies said in separate regulatory filings.

The announcements came as their shares rallied after Samsung Heavy president Park Dae-young hinted they could seek to merge again. 

In September last year, Samsung Engineering announced it would merge with Samsung Heavy to enhance its offshore business via a stock swap. But the plan was canceled due to opposition from shareholders in November.

“Considering business synergies, it is the right direction for the two companies to merge into one entity,” Park told reporters Tuesday.

Following the reports, Samsung Engineering and Samsung Heavy saw their shares hike 18.6 percent and 11.25 percent the next day, respectively. On Thursday, the prices continued to rally but tumbled after they denied it.

Industry watchers also remained cautious about the possible merger, saying the current business environment was no better than last year.

“The offshore business market is struggling from falling fuel prices. It is unlikely for the two companies to seek business synergies in the short term,” Han Young-soo, an analyst at Samsung Investment and Securities, said in a report.

But they agreed that their merger would not come soon, but in the longer term they would seek to merge as part of Samsung Group’s business restructuring for the pending leadership transition to a new generation.

Samsung Heavy is a shipbuilder that also produces bridge structures, builds plants and operates wind power facilities. Samsung Engineering’s business portfolio spans from refineries and power systems to industrial facilities and clean fuel plants.

On Thursday, shares of Samsung Engineering closed at 30,500 won ($26.20), down 7.99 percent from the previous day, while Samsung Heavy saw a 1.87 percent decrease to 13,100 won.

By Lee Ji-yoon (jylee@heraldcorp.com)