Industry sources say merger of the company’s display unit, Samsung Mobile Display soon to take place


Samsung Electronics on Monday announced the establishment of a new firm tentatively called Samsung Display Co. by April 1 through the spin-off of its liquid-crystal display unit.

The world’s biggest TV maker said initial funding of 750 billion won ($668.5 million) and 150 million new shares will be issued for the launching of Samsung’s new display company following a board meeting earlier on Monday.

The decision will be finalized at the regular shareholders’ meeting on March 16.

“Through the spin-off of the LCD business, we will be able to reach decisions at a faster pace and meet the various demands of our clients,” said Park Dong-gun, executive vice president of LCD businesses at Samsung Electronics. “The step will enable us to feature better products, technologies and services as we strengthen our business competitiveness.”

In the meantime, the LCD spin-off is noted as a step taken to eventually merge with the flagship electronics arm’s affiliate Samsung Mobile Display, according to industry sources.

The merger is expected to reposition Samsung Display to become the second-biggest company in total sales within the country’s top conglomerate.

“It is seen as a move to combine all of its LCD businesses into one for synergy and to transfer its focus from LCD to organic light-emitting diodes (OLED),” said an industry source.

Sources also said there were debates on whether to merge the mobile display unit into the electronics arm and vice versa but the spin-off was decided due to a number of reasons, including high costs incurring from the acquisition and the complex corporate governance structure.

Analysts provided a positive outlook for the merger with Samsung Electronics’ share prices closing at 1.17 million won per share on Monday. It rose up to 1.19 million won during the day.

“This is seen as Samsung’s commitment to regain its leadership in the global display industry by quickly transferring its LCD-centered large-size display businesses to OLED,” said Yoo Jong-woo, an analyst at Korea Investment and Securities.

“Unifying its decision-making channel of the display business will help the firm move onto bigger size OLED displays, amplifying the gap with its competitors.”

SMD has been focusing on the production of small and mid-sized AMOLED display panels used for mobile devices until now.

“It’s inefficient to separately operate the LCD business and the SMD, considering that AMOLED panels will expand into the television business from the display panels for smaller-sized gadgets,” said Ahn Sung-ho, an analyst at Hanwha Securities.

By Cho Ji-hyun (sharon@heraldcorp.com)