Samsung Group has pushed forward with internal restructuring of its key petrochemical units to boost competitiveness and efficiency, with the market expecting more deals involving Korea’s largest conglomerate.

The latest Samsung General Chemicals’ acquisition of Samsung Petrochemical was seen as part of chairman Lee Kun-hee’s succession process for his three children.

This merger, which was announced on Thursday, is said to be for the sake of Lee’s daughter Lee Boo-jin, in the view of market observers, as she is set to manage Samsung’s construction, chemical and hotel businesses.

Samsung C&T is the biggest shareholder of Samsung General Chemicals and Samsung Petrochemical. Lee Boo-jin, CEO of Hotel Shilla, is expected to remain one of biggest shareholders of the merged entity as she holds more than a 30 percent stake in Samsung Petrochemical.

The chemical tie-up, which followed that of Samsung SDI and Cheil Industries two days ago, is expected to pave the way for Samsung General Chemicals to become an integrated chemical company with 2.6 trillion won ($2.4 billion) in annual sales and 2.5 trillion won in assets.

“The 40 years of Samsung Petrochemical’s technical expertise will generate business synergy with Samsung General Chemicals to become a global chemical company,” Samsung Petrochemical CEO Chung Yoo-sung said.

Samsung Petrochemical, which specializes only in purified terephthalic acid, a raw material of polyester, has been facing lackluster earnings.

It posted an operating loss of 58 billion won last year and a net loss of 42 billion won last year, according to an audit report.

However, Samsung said it was upbeat that the company will see a turnaround after the tie-up.

“Both companies have merged as part of united growth strategies to gain a basis for long term growth,” said Son Seog-weon, president of Samsung Total Petrochemicals, a joint venture between Samsung General Chemicals and Total, a French energy conglomerate.

The new company is projected to continue Samsung Petrochemical’s PTA business as analysts expect that the sector will see a boost when the global economy, including China’s economy, improves this year.

Following the acquisition of Samsung Petrochemical, Samsung General Chemicals, which had handed over its facilities to Samsung Total, will have the capacity to produce 2 million tons of PTA annually in Ulsan and Daesan.

Samsung C&T shares rose 3.7 percent to 64,000 won on Thursday on news of the merger, which will increase the construction and trading company’s assets by 318.6 billion won.

“The tie-up will positively revalue Samsung C&T’s asset and stocks,” said Chey Sang-wook, an analyst at LIG Investment & Securities.

The market is currently bracing for a merger between Samsung C&T and Samsung Engineering as rumors concerning a deal between the two companies have been circulating for some time.

By Shin Ji-hye (shinjh@heraldcorp.com)