Samsung Techwin announced on Friday (November 28, 2014) that Samsung Group affiliates will sell their holding stakes in Samsung Techwin to Hanwha Group. Samsung Techwin is a major supplier of video surveillance equipment. Hanwha Group is a large South Korean conglomerate.

Samsung Group is reorganizing its business empire to make it easier for the children of Samsung Electronics Co Ltd (005930.KS) chairman Lee Kun-hee, 72, who has been hospitalized since a May heart attack, to divvy up the conglomerate.

This has included stake transfers between Samsung units intended to narrow the sprawling group’s focus.

In the latest shakeout, affiliates including Samsung Electronics will sell a 32.4 percent stake in defense firm Samsung Techwin Co Ltd (012450.KS) to Hanwha Corp (000880.KS) for 840 billion won, the group said in a statement.

According to Jon Cropley, Principal Analyst, Video Surveillance and Security, at IHS Research, Samsung Techwin has grown rapidly during the last decade and is estimated to have been the fifth largest supplier of video surveillance equipment in the world in 2013.

Despite this, by the company’s own impressive standards, 2013 itself was a tough year and it did not gain market share. For a company that likes to be a market leader in its core business areas, this must have been a setback.

According Cropley, “prices fell quickly in the video surveillance market in 2013, as vendors from China undercut their global competitors and increased their market shares”.

The sale of Samsung Techwin will allow Samsung to focus on its core businesses such as smartphones.

It will also provide Hanwha Group a clear opportunity to benefit from entering a market which is forecast to grow at an average of over 10% during the next five years.

Hanwha will need to make sure Samsung Techwin maintains a clear strategy for success though as competition is fierce and the supply base is highly fragmented.

There are hundreds and hundreds of suppliers of video surveillance equipment and the top 15 accounted for less than 50% of global revenues in 2013.