Cheil Industries and Samsung C&T ― two key affiliates of Samsung Group ― announced Tuesday they would merge in September, aiming to become a 60 trillion won ($59 billion) global enterprise by 2020.

Cheil Industries is the de facto holding company of Samsung Group, and Samsung C&T is the group’s construction and trading arm.

“The merger will pave the way for us to become a leading company in people’s lifestyles ranging from fashion to food, housing and leisure, alongside bio-industry. It will also create new opportunities and synergy for both,” said Yoon Ju-hwa, CEO of Cheil Industries’ fashion division.

The new firm will be launched on Sept. 1 after gaining approval from shareholders in July. 

Cheil, whose businesses range from fashion to chemicals and construction, will acquire Samsung C&T by offering 0.35 new shares for each share of C&T. However, the new company will be named Samsung C&T Corporation to “inherit Samsung’s founding spirit and reflect C&T’s global brand awareness,” the two companies said.

The new firm is expected to generate annual revenue of 60 trillion won, about double the current 34 trillion won in combined sales. Samsung C&T reported 28.44 trillion won in sales and 652 billion won in operating profit in 2014 while Cheil reported 5.12 trillion won in sales and 213 billion won in operating profit during the same period.

The merger of the construction units of both sides will elevate Samsung’s global competitiveness in the struggling construction market, the companies said.

C&T’s ample experience in global project operations and infrastructure will help Cheil’s fashion as well as food and beverage businesses expand overseas, following its sensational public offering last year, they said.

“And Samsung C&T has been seeking business diversification in the era of recession,” said Choi Chi-hun, president and CEO of Samsung C&T.

The two powerhouses have undertaken joint projects to test the waters. In 2014, they purchased Lakeside County Club, a golf course on the outskirts of Seoul. Moreover in 2011, they participated in Samsung’s foray into the bio-business, the next growth engine for the multibillion-dollar enterprise. Cheil holds 46.3 percent of Samsung Biologics and C&T holds 4.9 percent.

“The new firm will be the largest stakeholder of Samsung’s bio business, which will bring us both security and growth,” Cheil said in a press release.

Industry experts perceived the marriage of the two companies as a means to reinforce two pillars of the Samsung empire.

“Cheil Industries owns 19.4 percent of Samsung Life Insurance, which owns 4.1 percent of Samsung Electronics, the most important unit in the group in terms of profits. This merger will complement Cheil’s coffers and give Samsung C&T a leg-up in governance structure,” a stock analyst said. He forecast that Cheil may now be able to push its development projects in Yongin, Gyeonggi Province, near Everland theme park.

The merger news excited the stock market with Cheil share prices closing Tuesday at 188,000 won, a 14.9 percent increase from the previous trading day, while shares of Samsung C&T closed at 63,500 won, a rise of 14.8 percent.

By Bae Ji-sook (baejisook@heraldcorp.com)