Samsung Electronics has been advised to split in two by a US activist hedge fund, Seoul Economic Daily reported, in a move to boost shareholder value and allowing the heirs of the founding family to tighten their hold on the business.
Elliott Management wants Samsung Electronics to divide into a holding company and an operating company. It also wants a $26 billion special dividend paid to shareholders, the appointment of three independent board members, and a US stock exchange listing.
The South Korean giant will hold a conference call on 29 November (tomorrow) to disclose its shareholder returns policy and, according to a regulatory filing, has been mulling how to boost shareholder value.
Daniel O’Keefe, managing director of Artisan Partners, which holds more than 1 million Samsung Electronics shares, said he agreed with the plans, Bloomberg reported.
“Its governance, board and management structure is not well suited to the rapidly changing and highly competitive technology industry. Its board of directors has no truly independent members with experience in global operations, technology and capital allocation,” he said.
“Samsung has struggled over the past few years in its mobile business, most recently with the Note 7 fiasco, and we believe there is a link between poor governance and this poor performance,” he added.
Reuters cited David Smith, head of corporate governance at Aberdeen Asset Management Asia, as noting: “What is important is that these changes should benefit all involved, including family, group, and minority shareholders.”