Samsung Faces Daunting Task With Purchase of AST Research

AST Research Inc.’s agreement to be acquired by Samsung Electronics Co. simplifies the relationship that has developed between the companies for nearly two years, but leaves Samsung with the daunting problem of trying to reverse the once-proud computer manufacturer’s sliding fortunes.

Samsung said Tuesday it will pay $5.40 per share, or 30 cents per share more than its initial offer last January, for the 31 million shares of AST stock it does not already own.

The $170-million deal would make AST a unit of Samsung, which already owns about 49% of the company. Samsung, the Korean electronics giant, would also assume $307 million in AST debt.

After the deal, which was approved Monday by AST’s board of directors, Samsung will take the reins of a company that has 4,151 employees and operations around the globe, including a 232,000-square-foot headquarters in Irvine.

An AST spokesman said Tuesday that no layoffs are planned, that the company will continue to be operated in Irvine under current management, and that the AST brand name will be preserved.

“Samsung strongly believes in taking a long-term approach to the PC business and in increasing AST’s global brand awareness,” said Kwang-Ho Kim, chief executive of Samsung North America, and chairman of AST’s board.

Neither AST nor Samsung executives were available for further comment. A Samsung spokeswoman said the company plans to make an announcement next week regarding strategic changes at AST.

Experts had mixed opinions about Samsung’s prospects for halting a prolonged market share slide at AST, which has reported losses in 11 consecutive quarters, and posted a $418-million loss in 1996.

“AST has not been a good investment for Samsung so far, it remains a mistake, and [Samsung] is going to regret it a year from now,” said William Milton, an analyst at Brown Bros. Harriman in New York.

Others said that while AST may never return to the success it experienced in the 1980s, there is room for the company to survive.

James Staten, an analyst at Dataquest in San Jose, said AST outlined a potentially effective plan to concentrate on the small- to medium-sized business market during analyst briefings on Monday.

“They’re trying to get AST refocused so it’s not competing with Compaq, and the small-business market is a wide-open spot,” Staten said.