Cheil Industries' fashion business, one of the longest-running ventures of the Samsung Group, will be sold to the conglomerate's quasi-holding firm Everland.
Samsung chairman Lee Kun-hee's daughter Seo-hyun, who heads the fashion business, will also move to Everland and will operate the fashion business there independently, a Samsung executive said Monday.
The deal is in effect part of an ongoing transfer of ownership of the conglomerate from Lee to his children through the group's Byzantine holding structure.
Cheil in a board meeting on Monday agreed to sell the fashion business to Everland for W1.05 trillion (US$1=W1,074) on Dec. 1. It could then change the company's name to better suit its new focus as a parts and materials manufacturer.
The fashion business accounted for only 30 percent of the subsidiary’s first-half revenues of W3.15 trillion, while materials and components were responsible for 70 percent. The operating margin of the fashion business is two percent, compared to 10 percent for the materials and components business, while synergy between the two business areas was minimal.
Cheil has been trying to spin off the fashion business since the first half of this year but was reluctant to sell one of its longest-running businesses outside the group and opted instead to let Everland take it over.
Everland is ostensibly an amusement park business.
Analysts say the deal clarifies the succession to Lee Kun-hee's vast empire. Until now, the prevailing forecast was that the Samsung empire would be divided among his three children, who each own substantial chunks of the conglomerate.
Son Lee Jae-yong would inherit Samsung Electronics, where he currently is vice chairman, as well as Samsung's financial and heavy industries divisions, while eldest daughter Boo-jin, who leads Hotel Shilla and Everland, would get the hotels and resorts and trading arms and Seo-hyun the fashion, materials, parts and advertising businesses. But the latest deal has changed all that.
A Samsung spokesman claimed the deal is merely a business decision and it is "too early to jump to conclusions" about the transfer of management control.
The spokesman added that a glimpse of the next leadership could emerge after the next corporate reshuffle scheduled for this winter.