Samsung sells shares in chemical, defense arms

South Korea's Samsung Group said on Wednesday it is selling stakes in four chemical and defense firms for 1.9 trillion won ($1.72 billion) to Hanwha Group, the latest move in the massive task of restructuring the country's largest conglomerate.

Samsung Group is reorganizing its business empire to make it easier for the children of Samsung Electronics Co chairman Lee Kun-hee, 72, who has been hospitalized since a May heart attack, to divide up the conglomerate. This has included stake transfers between Samsung units.

The heirs are also trying to find ways to pay an estimated 6 trillion won inheritance tax bill. The listing of Samsung SDS Co and the upcoming IPO of Cheil Industries Inc would provide greater financial flexibility to manage that process.

"Samsung under Chairman Lee Kun-hee's leadership expanded into a wide range of businesses, but it looks like (heir apparent) Jay Y. Lee is now looking to move in the other direction and make the group more compact," said Chung Sun-sup, CEO of research firm Chaebul.com.

In the latest shakeout, affiliates including Samsung Electronics will sell a 32.4 percent stake in defense firm Samsung Techwin Co Ltd to Hanwha Corp for 840 billion won, the group said in a statement.

They will also sell a 57.6 percent stake in Samsung General Chemicals Co to Hanwha Chemical Corp and Hanwha Energy Corp for 1.06 trillion won, it noted.

Samsung's portion of Samsung Thales Co Ltd, a joint venture with Thales, and Samsung Total Petrochemicals Co, a joint venture with Total SA, also would be transferred to Hanwha firms.

While the group did not elaborate on the reason for the sales, Samsung Electronics said in separate regulatory filings that it would use the 761 billion won it raised from the deals to invest in new businesses.

Some analysts say the elder Lee's illness may have accelerated preparations by his son and his two daughters to ensure a smooth transfer of control.

The four companies being sold down in the latest moves are not seen as central to the succession process, and the younger Lees will see little direct financial benefit, analysts said.

Instead, the chemical and defense sales are seen as helping the group focus on its core strengths of information technology, financial services, construction and ship-building.

Hanwha Group, South Korea's 10th-largest conglomerate, said separately the acquisitions would boost its petrochemicals and defense-related businesses, and add around 12 trillion won in sales based on 2013 figures.