January 20, 2011 5:13 pm

Samsung buys Dutch group in return to M&A

Samsung Electronics has bought a Dutch maker of display technology for e-readers in the latest sign the world’s biggest technology company by sales is overcoming a long aversion to mergers and acquisitions.

The deal to buy Liquavista illustrates Samsung’s move away from insistence on making components in-house and a recognition that it will need to grow through international acquisitions. Samsung has been notoriously wary of such expansion since its unsuccessful purchase of AST in the late 1990s.

The South Korean company was forced to close the California-based computer maker after a mass defection of research talent and a string of losses.

Liquavista’s display technology is used for devices such as e-readers, mobile phones and media players.

Samsung is not producing panels for e-readers yet but it may enter this business using Liquavista’s panels, analysts said.

The Liquavista deal, for which Samsung did not disclose financial details, comes hard on the heels of a similar agreement to buy Medison, a South Korean medical equipment maker.

“There seems to be a clear change in their approach towards growth as they try to diversify their business by entering new areas,” said Kang Chung-won, an analyst at Daishin Securities. “They can secure technology through organic growth but it takes time. They are considering M&As for more efficiency and time-saving and I think they will become more aggressive in chasing such opportunities, given their huge cash reserves.”

Choi Gee-sung, Samsung’s chief executive, confirmed at the Consumer Electronics Show in Las Vegas earlier this month that the company would seek more overseas acquisitions. “As Samsung is involved in many business areas, it cannot do them all alone. It needs many partners,” he said.

Samsung appeared willing to return to M&A in 2008 by acquiring the intellectual property assets of Clairvoyante, a US licensing company. The year before it bought Transchip, a small Israeli non-memory chip developer, its first cross-border acquisition in a decade.

One of the greatest challenges for integration with other companies has been Samsung’s highly conservative and Korea-centred corporate culture, which has resulted in difficulty integrating international staff.

Samsung has ready funds available for M&A, with Won21,790bn ($19.4bn) in cash and cash equivalent as of the end of the third quarter. Its parent Samsung Group pledged to invest Won23,300bn by 2020 in new business areas, such as green technology and healthcare.

Additional reporting by Robin Kwong in Taipei

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