Cheil Worldwide, an advertising unit of Samsung Group, is rumored to be in talks to merge with a new global partner after its recent failed talks with French ad giant Publicis Groupe.

According to news reports Friday, the group is also planning to spin off the sports business division from Cheil, which has operated the firm’s sports teams, to better appeal to a possible buyer. 
Samsung is reported to have tried to sell the sports business to Publicis but the French partner expressed its reluctance citing the huge annual costs worth 100 billion won ($85 million).

After setting up a separate sports unit, the group, which has streamlined its business portfolio as part of its pending leadership transfer to a new generation, is expected to continue seeking a partner to sell its 28.45 percent stake in Cheil that is owned by Samsung C&T, Samsung Electronics and Samsung Card.

Cheil currently depends almost 70 percent of its sales on Samsung orders. The company has tried to diversify its clients by setting up overseas branches in recent years, but their reception has largely remained lukewarm.

Samsung Electronics, its sister firm and a crucial client, is also increasingly selecting ad agencies through public bidding rather than depending on its in-house firm. When it comes to its global marketing and ad campaigns, it has preferred to work with global ad agencies.

In the meantime, global ad companies are showing interest in Cheil’s Chinese network Pengtai. About 50 percent of the firm’s profits are from China, largely driven by the robust growth of its local unit.

“Cheil has almost no presence in overseas markets. Partnering with a global ad agency could elevate its brand power,” said an industry source on condition of anonymity.

“It is also a lucrative deal for global companies to secure more orders from Samsung Electronics, one of the world’s largest ad spenders.”

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