After the success of selling components of rival phones, Samsung’s Vice Chairman Lee Jae Yong is considering to enter the automobile industry. It wants to either build cars or tools for cars in a supply-side capacity similar to the place it holds in the mobile or radio industry around the world.
According to Bloomberg News, Samsung is in talks with Fiat Chrysler for acquiring auto-parts maker Magneti Marelli. Samsung is particularly interested in in-car entertainment, lighting, and telematics business currently but might also consider the acquisition of the entire company. Mr. Yong has tried to make Samsung less reliant on consumer electronics by pushing deeper into memory chips and displays. The deal will place the 48-year- old Vice Chairman of Samsung as the controlling shareholder. This would further strengthen his stamp on the South Korean giant and benefit from the rising interest of technology companies in the automobile industry.
Google, Apple Inc., and Baidu Inc are already pushing into the automobile industry by deploying their technology into new and advanced cars. Lee Seung Woo, an analyst at the IBK Securities Co. in Seoul, believes that even though Samsung is new in the automobile industry and is a late comer, the acquisition deal will be able to secure business competence. It is trying to change its business acquisition style as it cannot start everything from scratch.
According to Samsung, the company has more than $65 billion of cash and equivalents as of June 30th, 2016. Samsung’s stock has increased by 20% this year and is on pace for its annual increase since 2012. Samsung Electro-Mechanics Co., which currently makes camera modules for vehicles, has risen 6.5% while the Samsung SDI Co., which is the battery maker, rose 7.7%. On the other hand, Fiat’s shares have also increased since October 2014. According to Fiat, the company’s component business made 111 million euros of adjusted earnings before interest & taxes on the 2.43 billion euros of revenue, due to higher volumes of Magneti Marelli.
As per the news that Paklap.pk's team has gotten, the deal with Fiat Chrysler for Magneti Marelli is worth more than $3 billion. The intention is to close the deal this year which would make the deal the biggest Samsung acquisition outside South Korea.
The established brand such as Magneti Marelli will automatically give boost to Samsung’s automotive ambitions. The deal is the biggest move by the South Korean conglomerate since Samsung Motors Inc. went bankrupt in 2000. All that Paklap.pk has to say is that Samsung is ready to rule the tech world and knows how to play big.
