Samsung to merge two business units

[SINGAPORE] Samsung Group, whose billionaire chairman has been hospitalised since May, will merge its shipbuilding and engineering units as South Korea's largest conglomerate prepares for possible succession.

Samsung Heavy Industries Co, the world's third-largest maker of ships, will combine with Samsung Engineering Co before the end of the year in a deal valued at about 2.5 trillion won (S$3.08 billion), according to regulatory filings from the two companies on Monday. Shareholders of the engineering company will get 2.36 shares in the vessel maker in a merger that's based on share prices of 26,972 won for Samsung Heavy and 63,628 won for Samsung Engineering, according to the filing.

"This is the start of more restructuring that's to be expected from heavy-industry companies within the Samsung Group," said Kim Hyung Gun, an analyst at Meritz Securities Co in Seoul. "The group seems to have decided that it needed to revamp the units because there were too many overlapping areas, like in the construction business."