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Samsung Electronics considers split

Samsung Electronics is considering a proposal to simplify its structure under pressure from shareholders as it tries to deal with fallout from the Galaxy Note 7 recall

Samsung Electronics has announced it is considering the “possibility” of creating a holding company structure to improve the company’s corporate structure and enhance its transparency.

“Samsung Electronics has taken steps to simplify its business to concentrate on core capabilities in the past several years and the company continues to review opportunities to optimise long-term value,” the company said in a statement.

“This includes the possibility of creating a holding company structure and the potential benefits and feasibility of listing the company’s shares on additional international exchanges,” it said, adding that a decision will be made only when the review is completed in six-months’ time.

Samsung said it would bring in “external advisors to conduct a thorough review of the optimal corporate structure”, adding that “the review does not indicate the management or the board’s intention one way or another”.

The announcement followed a meeting by Samsung’s board of directors amid growing calls to improve shareholder value, according to the Korea Times.

The proposed re-structuring would allow heir-apparent Jae-Yong Lee to take over the firm from his father, Kun-Hee Lee, and address governance concerns, said The Guardian.

Analysts said a split would give the vice-chairman and de facto leader of the company, Jae-Yong Lee, a tighter grip on the company through a holding firm. The company said it will also nominate at least “one new, international, independent board member” and create a separate governance committee.

The proposal has reported won support from several investors and would give back more control to the founding Lee family.

The review comes after US hedge fund Elliott Management proposed in October 2016 that Samsung split into a holding company and an operating company to fix its “excessive and inefficient capital structure”.

The fund said a split would simplify the company structure, making it easier to get a clear valuation of the firm’s assets and what each individual Samsung company is worth.

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Currently, companies in the Samsung Group are linked through a complicated web of cross shareholding, linking Samsung Electronics to many other Samsung’s firms and affiliates ranging from shipping, to heavy industries to insurance business, according to Sigma Live.

Samsung has also come under pressure from foreign investors to improve its corporate governance as it tries to limit the damage from the global recall of the Galaxy Note 7 after failing to resolve battery problems leading to overheating and the devices catching fire.

“We are committed to enhancing sustainable long-term value for our shareholders and to remaining good stewards of capital,” Oh-Hyun Kwon, CEO of Samsung, said in the statement.

Samsung has also announced that it will increase per-share dividends by 36% this year to 28,500 won (US$24.38). ... ... ... ... ... ... ... ... ...  ... ...  ... ... ... ...

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