Samsung has announced that it is considering splitting the company in two amidst pressure from shareholders to simplify its business structure, resulting in a holding company and an operating company being created from the current, singular Samsung.
According to a new report, the move would increase shareholder value whilst representing the biggest change to the company in its history. In its current form Samsung has assets spread across multiple affiliated businesses, which some say makes it difficult for investors to value the company as a whole.
If Samsung was to establish a holding firm, all of these business could be brought under one overarching name, making it easier for Samsung Electronics as a whole to be valued.
Samsung said it also plans to increase returns to shareholders by as much as a third, while also accelerating its existing share buy-back scheme. U.S. hedge fund Elliot Management, which owns 0.6 percent of Samsung, called for a managed split of the company last month which is believed to have helped push Samsung towards at least considering such a move.
Samsung said it would increase dividends for 2016 by 36 percent to 28,500 won ($24.36) per share, and buy back and cancel additional shares in January 2017 with whatever excess free cash remains from 2016.
Samsung, predictably, is keen to point out that the fact it is considering such options, does not mean that it has made a decision one way or another. In a statement, Samsung has said that “the review does not indicate the management or the board’s intention one way or another,” and further added that it had hired external advisers for a review which is expected to take at least six months.
The last few weeks have been trying ones for Samsung following the recall and subsequent cancellation of its flagship Galaxy Note 7 smartphone, and even though the company is pushing Apple in that industry, shareholders are becoming increasingly concerned regarding the company as a whole. Samsung will hope to turn that around quickly.
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