Sammy has announced a merger with fashion, leisure and construction biz Cheil Industries, a company in which the tech giant already owns a sizable stake, in a move designed to bolster the South Korean conglomerate as power passes from current leader to probable heir apparent Lee Jae-yong.

The combined company (one of South Korea's largest, in terms of market capitalisation) is aiming for revenues in 2020 of 60trn won (£40bn). The two companies had combined annual revenue of 34 trillion won in 2014.

The plan appears to be part of the company's hand over process to place Samsung's ailing chairman's son at the helm of the company. Lee Jae-yong is widely considered to be the future successor to his father's position.

The merged entity will also become the single largest shareholder of Samsung’s bio-pharmaceutical business.

Under the agreement, subject to approval from the two companies’ shareholders, Cheil will acquire Samsung C&T by offering 0.35 new Cheil share for each Samsung C&T share. The combined entity will be called Samsung C&T.

“This merger is a strategic decision to help us preemptively secure core competencies and grow as a leading global company that can provide integrated premium lifestyle services,” said Juhwa Yoon, President and CEO of Cheil Industries.

Chi-Hun Choi, President and CEO of Samsung C&T, said: “The merger will give us an opportunity to diversity our business portfolio and find new growth drivers in the areas of fashion and biotechnology.”

The transaction is expected to be completed on 1 September, pending approvals at shareholder meetings of the two companies scheduled in July. ®