Samsung Electronics considers split as investor pressure builds

Tue Nov 29, 2016 1:49pm EST
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By Se Young Lee

SEOUL (Reuters) - Tech giant Samsung Electronics Co Ltd (005930.KS: Quote), under pressure from shareholders to improve investor returns, said on Tuesday it will consider creating a holding company in what would be the biggest shake-up in its 47-year history.

The move and a plan to raise dividends come after U.S. hedge fund Elliott Management in October called for the South Korean firm to split itself into a holding vehicle and an operating company.

However, the world's top maker of smartphones, memory chips and televisions, said it was "absolutely neutral" about whether to proceed and provided little detail on the potential restructuring, underwhelming investors.

"The review does not indicate the management or the board's intention one way or another," the company said in a statement, adding it had hired external advisers for a review expected to take at least six months.

Samsung's statement keeps the door open for Elliott to continue its pressure on the company, which includes the hedge fund's ability to nominate board directors at the next annual meeting.

Elliott, through its holding company affiliates, Blake Capital and Potter Capital, called Samsung's plan a "constructive initial step." But the $27 billion hedge fund also signaled it wanted more.

"We anticipate more meaningful changes following the company's corporate structure review," the Elliott affiliates said in a statement on Tuesday.

The shareholder pressure on Samsung comes as the company juggles a leadership succession and a major blow to its brand after issuing an unprecedented recall of at least 2.5 million Galaxy Note 7 smartphones in September.   Continued...

A Samsung Electronics laptop computer is displayed at a shop in Samsung's main office building in central Seoul July 23, 2013.     REUTERS/Lee Jae-Won/File Photo