Masterclassing

Samsung Considers Splitting its Business in Two

Tyrone Stewart

samsungSamsung is considering splitting its business in two, amid pressure from US hedge fund management firm Elliot Management Corporation, the Seoul Economic Daily reports.

Elliot Management, who own a 0.6 per cent stake in Samsung, has called on the South Korean tech giant to divide itself into a holding vehicle, for ownership purposes, and an operating company – as well as insisting on a 30 trillion Won (£21bn) pay out in a special dividend.

The hedge fund management company also propose the return of at least 75 per cent of free cashflow to investors and the appointment of some independent directors. Samsung is said to be considering the split, although declined to elaborate further.

David Smith, head of corporate governance at Aberdeen Asset Management Asia, told Reuters: "It's difficult to argue with the logic of Elliott’s proposals. A simpler structure is certainly preferable, and yes most would agree they can afford to pay out more. What is important is that these changes should benefit all involved, including family, group, and minority shareholders”

It has long been speculated that Samsung could potentially split to help its founding family heirs to boost their control over the South Korean multinational.

Samsung will hold a conference call at 0930 KST (0030 GMT) to discuss its plan.

Whatever the firm decides, it will be keen to avoid making the wrong decision or alienating investors, especially so soon after the Galaxy Note 7 fire fiasco that has cost it a great deal of money this year – and the recent office raids over alleged links to South Korean President Park Geun-Hye.