Credit card company Samsung Card will divest all of its 19.9 percent stake in automaker Renault Samsung Motors, in a sale that would pull the plug on its parent Samsung Group’s old, botched auto dream.
The company said the decision was made recently and has tapped Samsung Securities, Samsung Group’s financial investment arm, to lead the exit.
“Though we are pursuing the stake sale, details such as the method of sale, the buyer and the process have yet to be decided,” the credit card company said in a statement on Thursday.
Further details will be announced within the next month, it added.
The automaker said it will keep the current emblem for the vehicles that will be produced at its manufacturing plant in Busan after the stake sale, though it has yet to change its name.
Samsung first entered the automotive industry with Samsung Motors in 1994.
In 2000, the car unit was acquired by French automaker Renault Samsung with Samsung Card purchasing the stake for 87.6 billion won or around $78.2 million at that time.
Renault holds a controlling 81 percent stake.
As part of the deal, Samsung earns a 0.8 percent royalty from the automaker’s domestic earnings each year.
The move comes after Samsung Electronics and Samsung C&T decided not to renew a deal with Renault on the use of Samsung’s brand, which came to an end in August last year.
When a two-year probation period ends in 2022, Renault Samsung Motors will have to drop the conglomerate’s brand from its name.
Hit by the coronavirus pandemic, Renault Samsung Motors suffered an operating loss of 79.6 billion won ($67.9 million) last year.
Multiple failed wage negotiations with the company’s labor union has also put a further strain on the automaker.
On top of poor sales performance and a series of union strikes in recent years, a growing preference for foreign car brands in the country has also cast doubt over the profitability of the partnership.
In a semiannual report, Samsung Card estimated the value of its stake in the South Korean unit of Renault at 249.2 billion won.
By Yim Hyun-su (firstname.lastname@example.org