S. Korea OKs Samsung Purchase of AST

Samsung Electronics Ltd. said Monday it has received all the necessary approvals from the South Korean government to buy AST Research Inc.

Samsung had extended its $5.40-per-share, or $170-million, tender cash offer for the shares of AST it did not already own while it awaited these approvals. The South Korean firm, the world’s largest producer of memory chips, already owns 49% of the Irvine company.

As of July 21, Samsung said, about 88% of the outstanding shares had been tendered, and all other conditions to the offer have been satisfied. The tender offer and withdrawal rights end Friday.

“As a Samsung company, AST’s position in the market is strengthened and is another indication as to the long-term intent on building and promoting the AST brand name,” said AST President and Chief Executive Officer S.T. Kim in a statement Monday.

Analysts said it is too soon to predict whether AST will return to its glory days, when it was one of the top six computer makers in the country. Because it will soon be part of a private corporation, experts said it will be difficult to distinguish AST’s performance among Samsung’s overall operations.

“AST was doing OK while the market was booming,” said Kevin Hause, a PC industry analyst with International Data Corp. “Now, it’s a question of whether AST can succeed in creating a product that offers more value than the competition, like Compaq or Dell or IBM.”

During the 1980s, AST was one of the fastest-growing high-tech companies in the world. But by the early ‘90s, AST began to stumble badly. Samsung rescued the company with a $378-million cash infusion in 1995. Since then, it has taken control of AST’s board of directors and installed Samsung-affiliated executives in top positions.

AST has been focusing on attracting smaller businesses and quietly retreating from its earlier forays into the consumer and Fortune 1000 arenas, Hause said.

“AST always had decent products, but they’ve tried to be all things to all people,” Hause said. “They’ve never had the marketing savvy to really carve out a place for themselves, and so they’ve continually floundered. That will have to change if Samsung is really going to compete in the PC market.”

Samsung pushed back its January offer three times while awaiting government approval. On May 19, it bumped the offer to June 17, then to July 1.

AST’s shares gained 19 cents Monday on Nasdaq, closing at $5.375.