Samsung is reportedly holding off on adopting a widely anticipated holding company structure, despite calls by investors to implement the move and streamline its business.
According to Reuters, the South Korean smartphone leader, which is currently undergoing a strategic review of its business, said at its annual shareholder meeting it was unlikely at present to set up a holding company.
The company’s senior VP and head of IR Robert Yi first said in November it was carrying out a comprehensive study of converting to a holding company structure, while cautioning that changing the structure was highly complex and requires multiple steps, with the review process alone likely to take six months at least.
However, it now appears the plans have been put on the backburner altogether. CEO Kwon Oh-hyun reportedly said at the meeting “there are negative effects that would arise from transitioning to a holding company,” without elaborating on what that meant.
Reuters reported the mooted restructure has been thrown into doubt given the current political scandal surrounding Samsung Group leader Jay Lee, who was arrested on bribery and embezzlement charges.
US activist hedge fund, Elliot Management, in particular, put pressure on Samsung to divide into a holding company and an operating company. Investors believe such a move could improve governance, boost the company’s value, and remove a current complex ownership structure.
The internal review continues.