Samsung Group to decide today whether it will split into two

The proposal had been put forward by Hedge fund activist Elliot Management.

Seoul Economic Daily has reported today citing a source that Samsung Electronics will consider splitting into two, as suggested by U.S. activist hedge fund Elliott Management.

A split would most probably allow Samsung’s founding heir the Lee family to strengthen their grip on the global smartphone leader, which is the crown jewel of the Group’s business empire.

Elliott had proposed a split in October to boost shareholder value.

Samsung’s board of directors is stated to meet tomorrow and respond to Elliott’s proposals, reported the Seoul Economic Daily.

The Korea Exchange has separately asked Samsung to comment on its decision by 6 p.m. (0900 GMT) today, on whether it planned a spinoff.

Samsung Electronics did not immediately comment on the newspaper report.

Elliott Management had proposed to divide the Samsung Group’s business into a holding company and an operating company; pledge to return at least 75% of free cash flow to investors, pay $26 billion as special dividend, and agree to appoint some independent directors.

Neither the Samsung Group nor the Lee family have commented on the group’s restricting plans.

Ever since Jay Y Lee took over the reins of the group, Samsung’s reorganization efforts have accelerated. His father, Samsung patriarch Lee Kun-hee was incapacitated in May 2014 by a heart attack.

Already, Samsung has sold non-core assets and in 2015 had pushed for the merger of two affiliates under a company controlled by Jay Y. Lee and his two sisters.

These pertinent moves are designed 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,” reads the report from HI Investment.


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