Samsung eyes OLED market with $350 million acquisition

Samsung Electronics and Cheil Industries have agreed to pay €260 million ($350 million) for a 90% stake in Novaled, a German company that specialises in improving the performance of organic light-emitting diodes (OLEDs) used in smartphone displays and the next generation of televisions.

The consortium of sellers are mostly European private equity firms that provided three rounds of funding between 2003 and 2009, according to Capital IQ data. The transaction includes a €30 million payment, contingent on reaching certain milestones, and values Novaled at roughly €260 million.

The two buyers are both members of the Samsung group. Cheil Industries is buying 50%, while Samsung Electronics is taking 40%, according to an announcement on Friday. An investment firm within the Samsung group already owns the remaining 10%.

Cheil makes chemicals and also owns a number of fashion brands, in addition to making materials for OLED displays. However, the success of Samsung’s Galaxy devices — a range of tablets and smartphones — has led it to increase its focus on the development of the electronics business.

The acquisition is clearly strategic for Samsung, which is reflected in the price it is paying for a company with a book value of less than €30 million.

OLED displays are thinner and lighter than their liquid crystal counterparts, which has made them popular in smartphones. The technology can even be used to make curved displays, but manufacturers such as Samsung and LG have faced technical challenges in scaling the technology up for big-screen TVs.

Novaled may be able to help Samsung lower the cost and improve the lifetime performance of bigger displays, giving the company an advantage in the latest generation of TVs.

Novaled was founded in 2001 and is headquartered in Dresden, Germany. In addition to making proprietary materials for improving OLEDs, the company also licenses its intellectual property and provides research and development services for various stages of OLED product development.