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Report: Samsung Electronics considering splitting into two companies

The move would simplify Samsung's complex corporate structure while at the same time providing it with great organizational and tax benefits.

Published onNovember 28, 2016

Last month, US-based activist hedge fund Elliott Management proposed that the biggest smartphone manufacturer in the world should split into two companies. According to the hedge fund, Samsung Electronics should split into a holding company for ownership purposes and an operating company.

The move would simplify the company’s complex corporate structure, while at the same time providing it with great organizational and tax benefits. It would also have a positive impact on its stock, which Elliot Management believes is currently undervalued by as much as 70 percent.

Samsung is buying audio and automotive specialist Harman for $8 billion

Elliot Managements also thinks that Samsung Electronics, which is controlled by the Lee family, should get listed on the Nasdaq stock exchange and increase its return of capital to shareholders. That means paying $26 billion in special dividends and pledging to return a minimum of 75 percent of free cash flow to its investors. In addition, the company should also appoint a few independent directors to its board.

According to a report from Seoul Economic Daily, Samsung will soon release an official response to the proposal. Samsung’s board of directors will meet tomorrow to discuss it in detail and should announce a decision on the same day.

What exactly that decision will be is anyone’s guess right now. So we’ll just have to sit back and wait for another day to see what happens. When Samsung releases its official statement on the subject, we’ll be sure to let you guys know. Stay tuned.

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