Samsung SDS Headquarters. (Photos: Samsung SDS)

Samsung SDS has officially denied speculation that the company’s logistics business may be consolidated or disposed of to Samsung C&T.

On July 18, an online story claimed that Samsung SDS has never considered selling the logistics business or merging it with Samsung C&T, and has no such plan.

In early July, a study was submitted to the board of directors of Samsung SDS on spinning off the logistics business. 

Samsung SDS’s logistics business depends heavily on businesses with subsidiaries of Samsung Group. 

In particular, logistics projects of Samsung Electronics’s overseas operations are a key area of Samsung SDS’s logistics business, but most of the projects are to be completed by next year. The reason behind the spin-off of Samsung SDS’s logistics business is that no growth is guaranteed when the business relies on the logistics of the group’s subsidiaries. 

Speaking on the background of the latest public filing, a Samsung SDS official said the step was designed to prevent the spread of groundless speculation.

Rumors have been running rampant in IT business circles have on the many scenarios that could play out with Samsung SDS’s logistics business’s spin-off, sell-off or merger. They included a scenario in which Samsung SDS divides the business process outsourcing sector and merges it with Samsung C&T. Another says the logistics business is retained as a parent company, and the IT service business is spun off as a 100 percent subsidiary. 

According to the public filing, Samsung SDS will be divided into IT service and logistics businesses. The logistics business will be spun in the form of physical division from Samsung SDS. Some analysts said the spin-off is designed to smooth out minority shareholders’ opposition. 

Samsung SDS’s minority shareholders are opposed to a plan to spin off the logistics business since it undermines the future value of the company. They staged a protest in front of Samsung Town in Seocho-dong, Seoul, on July 19, and plan to submit to a prosecutors’ office a complaint against Samsung Electronics Vice Chairman Lee Jay-yong’s use of undisclosed information. 

A view of a Vietnamese logistics center of ALS with which Samsung SDS has agreed to establish a joint venture in Vietnam.

Samsung SDS Teams Up with ALS to Establish Joint Venture in Vietnam

Samsung SDS has agreed to establish a joint venture with Aviation Logistics Service, a leading Vietnamese air freight terminal operator, to tap the Vietnamese logistics market. Earlier, Samsung SDS agreed to set up a joint venture with Thailand’s Acutech as part of its strategies to expand its business in the Southeast Asian country.

The Vietnamese logistics market has been growing around 15-20 percent annually in recent years, according to Samsung SDS. 

Korean manufacturing companies, including Samsung Electronics and LG Electronics, have been rushing to the Vietnamese market to emerge as a production center to benefit from the U.S.-led Trans-Pacific Partnership and the ASEAN economic community.

Samsung Electronics, Samsung SDS’s largest customer, took a 20 percent share in all Korean exports to Vietnam, which were tallied at to $32 billion, business source said. Samsung SDS now covers about 40 percent of cargo entering and leaving Hanoi airport.

Through the joint venture, Samsung SDS will be in charge of its integrated logistics service, including global and inland transportation, warehousing service, and customs brokerage. The company also plans to utilize ALS’ customer network to attract potential customers.