SEOUL, KOREA - Nomura Financial Investment (Korea) Co. downgraded the Samsung Heavy Industries stock on September 15, with its target price adjusting downward as well. This is based on the judgment that the upcoming merger with Samsung Engineering would be detrimental to shareholder value and financial results. Its investment opinion on the stock turned to "sell" from "buy" while the target price plunging to 21,000 won from 36,000 won.

 

A Nomura Financial Investment analyst said, "The merger between Samsung Heavy Industries and Samsung Engineering may dilute shareholder value as it will take a long time to see synergies from the union."

 

Earlier on September 1, the board of directors meeting in the two Samsung Group companies had approved the merger proposal. They plan to hold an extraordinary shareholders meeting on October 27 and finalize the merger on December 1.

 

The Nomura analyst added that the merged company's profitability would also suffer. He said, "After setting aside the 500-billion-won allowance in the first quarter, it was widely expected that Samsung Heavy Industries' financial performance would improve. But the prospect by now is not so clear after the merger announcement."