After a long period of silence, Lee Jae-yong, chairman of Samsung Electronics, has recently undertaken a series of mergers and acquisitions (M&A), launching efforts to uncover future growth opportunities for Samsung Electronics. Earlier this month, he acquired the U.S. audio division of Masimo through Samsung Electronics subsidiary Harman for $350 million (about 500 billion won), followed by the purchase of the German company Fläkt, Europe's largest air conditioning equipment manufacturer, for 1.5 billion euros (about 23.7 trillion won). This acquisition targets the cooling equipment sector, essential for artificial intelligence (AI) data centers, and is seen as a strategy to seize the rapidly growing AI infrastructure market.
Samsung Electronics announced on the 14th that it has signed a contract to acquire 100% equity in Fläkt, owned by the British private equity fund Triton. Based in Herne, Germany, Fläkt is a B2B (business-to-business) heating, ventilation, and air conditioning (HVAC) specialist that provides cooling solutions to data centers, clean rooms for factories, and industrial and residential buildings.
◇ Leading player in the European air conditioning market with annual sales of 1 trillion won… boasts over 100 years of know-how
The acquisition of the Masimo audio division was aimed at strengthening Harman's audio solutions capabilities, while the Fläkt acquisition is a strategic move to establish a foothold for a new leap in the air conditioning field. The air conditioning equipment market is particularly gaining attention as investments in AI data center infrastructure rapidly expand. Samsung Electronics plans to combine Fläkt's specialized cooling solutions for data centers with its existing heating and cooling technologies to secure a leading position in the AI infrastructure market.
Founded in 1918, Fläkt is a global air conditioning specialist with over 100 years of experience and employs 3,500 people. It supplies central air conditioning products and solutions to homes, offices, schools, and hospitals in 65 countries worldwide, as well as advanced facilities. Its annual revenue was approximately 730 million euros (about 1.16 trillion won) last year. Fläkt has rich experience providing customized solutions in various B2B environments, including clean rooms, gigafactories, data centers, large hospitals, marine plants, and large residential complexes. Its strength in possessing a large number of maintenance specialists is also noted.
The primary purpose of Samsung Electronics' acquisition of Fläkt is to achieve results in the next-generation growth market of AI data centers. Fläkt has numerous contracts for data center cooling facilities, successfully proving its technical capabilities through projects, including the Microsoft (MS) campus in Dublin, the Southwest data center, the Midland data center, and the University Medical Center Groningen (UMCG) data center in the Netherlands.
The heating, ventilation, and air conditioning market is broadly divided into ▲central air conditioning targeting large facilities such as airports and factories, and ▲individual air conditioning systems focused on homes and commercial systems (ductless). Samsung Electronics has been advancing its air conditioning business mainly through individual air conditioning products, but since central air conditioning requires extensive global supply experience and advanced design capabilities, the entry barriers are high. Lee Jae-yong's decision on M&A appears to stem from this strategic judgment.
According to major market research firms, the central air conditioning market size is projected to grow from $61 billion (about 86 trillion won) last year to $99 billion (about 140 trillion won) by 2030, reflecting an average annual growth rate of 8%. The data center sector is expected to grow even faster, showing an average annual growth rate of 18%, and is anticipated to reach $44.1 billion (about 62 trillion won) by 2030.
◇ Owner directly leads the discovery of next-generation growth opportunities
In the business community, Lee Jae-yong's initiation of new business discovery is being regarded as significant. After being hindered for a long time by legal risks that made normal business activities difficult, he has begun to show changed behaviors this year following a company-wide tumult. As revenue from existing business areas such as semiconductors, smartphones, TVs, and home appliances declines, M&A is deemed essential to uncover next-generation growth opportunities.
A business figure noted, "In the AI era, as hardware and solutions evolve rapidly, large corporations such as Samsung Electronics can benefit from leveraging M&A strategies along with in-house research and development (R&D). M&A has the advantage of enabling quick entrenchment in growth markets, but it also comes with significant risks, which is why only the top decision-maker, in this case, Lee Jae-yong, can make such decisions."
Since Lee Jae-yong took the position of registered director in 2017 and conducted the 'major M&A' acquisition of Harman, it has been evaluated as a successful endeavor. In its first year of acquisition, 2017, the operating profit was only 60 billion won, but it reached 1.3 trillion won last year, marking the highest performance ever recorded. Although it was once considered a 'painful thorn' due to poor performance, it has shown consistent improvement during a time when core businesses like semiconductors face challenges.