SEOUL Cheil Industries Inc, a unit of South Korea's biggest business conglomerate Samsung Group, said it would sell its fashion business to unlisted affiliate Samsung Everland in a strategic shift to focus on electronics materials.
The 1.05 trillion won ($968.6 million) asset transfer comes as Samsung Group seeks to tighten its grip on electronics components and materials and ensure easy access to the latest technology as it battles global rivals such as Apple Inc in the rapidly changing mobile industry.
Cheil Industries - which started as a textile firm in 1954 before expanding into the fashion business in the 1980s and later into electronics materials - has seen its fortunes increasingly tied to the IT industry, largely thanks to its supply deals to Samsung Electronics Co Ltd and electronics parts affiliates.
Its fashion business generated only 30 percent of its total revenue last year, with the rest coming from electronics materials and chemicals operations. Cheil Industries makes electronics components such as flat-screen films and poly carbonate used in smartphones.
Along with other Samsung firms, it recently acquired German OLED raw materials firm Novaled AG in a 260 million euro ($351.25 million) deal.
Cheil's fashion business will add to Samsung Everland's business portfolio of theme parks, catering services and building management services.
With just 3.05 trillion won of revenue, Samsung Everland serves as the de facto holding company for the Samsung Group as it stays at the top of Samsung Group's complicated cross shareholding structure.
Its top shareholder is Samsung Electronics vice chairman Jay Y. Lee, the only son of the firm's chairman, Lee Kun-hee.
The Lee family owns nearly 50 percent of the firm and the rest is owned by Samsung group affiliates.
After the announcement, shares in Cheil rose 4.8 percent to three-month highs.
(Reporting by Miyoung Kim; Editing by Stephen Coates)