South Korea“s Samsung Group has taken control of the Shenzhen-listed SEG Samsung Glass Co Ltd, after its acquisition of an additional 14.09% equity stake in the company received approval from the Chi…
South Korea“s Samsung Group has taken control of the Shenzhen-listed SEG Samsung Glass Co Ltd, after its acquisition of an additional 14.09% equity stake in the company received approval from the Chinese government. It thus becomes the first South Korean company to obtain management control in a company listed on the Chinese stock market. The equity was purchased by Samsung“s joint venture, Samsung Corning Malaysia, from the Chinese state-run SEG (Shenzhen Electronic Group), which agreed to transfer 110.75 million State shares it held in SEG Samsung at a price of CNY 2.14 per share, according to a circular published by SEG Samsung Glass Co Ltd on 13 April 2004. The purchase received Chinese government approval and was completed on 8 April 2004, the circular said. Samsung Corning“s share in SEG Samsung has increased to 35.46% and it has become the majority shareholder. SEG Samsung, based in Shenzhen, makes CRT glass. Samsung Corning originally held 21.37% of shares in the company. SEG, originally the largest shareholder of SEG Samsung, will use the money from the share transfer to repay a CNY 140.7 million ( USD 17 million) debt it owes the listed company, according to previous announcements. “The debt payment is positive news for the listed company,” said Wang Guoping, an analyst with China Galaxy Securities. “Its share has been moving up since the matter was reported last year.” The acquisition process took more than a year to complete. CRT glass is a highly competitive sector which is the reason foreign participation is encouraged, said Wang, adding that after the acquisition, Samsung, with its advanced expertise in the business, will further enhance its technological and capital support to the joint venture in China. It is also a strategic move by the South Korean company to transfer its production base to China. SEG Samsung is already building a new plant in Shenzhen, costing a total of CNY 4.1 billion (USD 495.1 million) and which is expected to be completed in July 2004. It will add new production lines and increase production capacity of CRT glass, company sources said.