South Korea's "Samsung Electronics Co Ltd" will examine splitting itself into two as recommended by the U.S. activist hedge fund Elliott Management. Seoul Economic Daily gathers information by an exclusive source.
The proposed split would grant the heirs of the founding Lee family to sustain their grip on the global smartphone leader, the crown jewel of the "Samsung Group" business empire. Elliott Management wants a split in this October 2017 to improve shareholder value.
The "Samsung Company" board of directors will have a meeting on Tuesday November 29 2017. Responding Elliott's proposals, the Seoul Economic Daily newspaper stated. The Korea Exchange separately asked Samsung to discuss the matter by 6 p.m. (0900 GMT) on whether it planned a spinoff.
The "Samsung Company" did not immediately respond on the newspaper report. The protected fund wants "Samsung Electronics Co Ltd" to split into a holding vehicle for ownership objective and the operating company, will pay a $26 billion special dividend, swear to return at least 75 percent of free cash flow to investors and allowing them to appoint some independent directors.
Neither the Lee family nor "Samsung Group" have concluded on reestablishing the plans, but the reorganization efforts has been increased since Jay Y. Lee took over the reins after his father, the Samsung patriarch Lee Kun-hee was paralyzed following a heart attack last May 2014.
"Samsung Company" has sold non-core assets while presuming through a merger of two affiliates in 2015 to consolidate the stakes in key affiliates under a company handled by Jay Y. Lee and his two sisters, as the founding family wants to secure a stable transfer of control.
"Even if Samsung Electronics does not comment on specifics such as the timing of a split; the firm will at least say it will implement ownership structure changes in a reasonable manner."-HI Investment stated in a report last Monday.
