Samsung May Split Company in Two to Allay Investor Concerns

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Samsung Electronics announced on Tuesday it is considering splitting itself into a holding company and an operating company in order to boost shareholder value, in what could be the biggest shake-up in the South Korean tech giant's history.

According to Reuters, the move is part of a bid to improve investor returns after Samsung came under pressure from shareholders to simplify its business structure. Critics argue that the current structure makes it difficult to value Samsung since its assets are spread across various sister companies and affiliates. Establishing a separate holding firm would bring these under one name, improve transparency, and make it easier to value Samsung Electronics' business.

Samsung
Samsung said it would also increase returns to shareholders by one third and accelerate its share buy-back program. The plans come after U.S. hedge fund Elliot Management, which owns 0.6 percent of Samsung, called for a managed split of the company last month.

A split in two of the company has been a subject of speculation among market analysts for a while and would allow Samsung to list on additional stock exchanges around the world. However, some say any potential split could hand more control back to the original family owners and be a particularly favorable outcome for Samsung heir apparent Lee Jae-Yong, who was recently nominated for a seat on the company board.

Despite the announcement, Samsung offered little detail on the potential restructuring and said it was "absolutely neutral" about whether to proceed. "The review does not indicate the management or the board's intention one way or another," said the company in a statement, adding it had hired external advisers for a potentially six month-long review process.

While Samsung moves to assuage investor concerns, the company still has to win back confidence in its consumer mobile division after its disastrous Galaxy Note7 recall in early September. Samsung's share of the smartphone market dropped in the third quarter of 2016 to its lowest level in nearly two years, with financial results for the fourth quarter expected to suffer more after the subsequent discontinuation of the flagship phone.

Tag: Samsung

Top Rated Comments

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48 months ago
They should stop copying and attempt to be an actual reputable company.
Score: 6 Votes (Like | Disagree)
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48 months ago
More aptly, "Mixed Legal Businesses" and "Bribes, Corruption and Other Bets".
Score: 3 Votes (Like | Disagree)
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48 months ago
Maybe they should split into two business units: products that do explode and products that don't explode.
Score: 3 Votes (Like | Disagree)
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48 months ago

I thought that's precisely the whole idea.

Right. Another day, other companies wanting to merge into one bigger company and the story is spun just slightly differently... that merging into a structure like Samsungs is about diversifying risk across many business units, lowering risk should any one business unit have trouble:

"Critics argue that the current structure (of separate business structures) makes it difficult to value <company buying the other company>, since their separate assets are spread across various sister companies & affiliates." Merging these 2 companies together can realize more favorable ROIs by streamlining business operations, eliminating redundancy and facilitating additional focus under one unified brand and leadership.

Basically IMO, some banker wants to earn a commission, so big corporate structure changes look like easy money. Hop forward 5 or 15 years and some other banker wanting to earn commission will be spinning merging the splits into one larger company to "streamline operations," etc. It's kind of money-making "busy work" for the 1%ers.
Score: 2 Votes (Like | Disagree)
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48 months ago
Pre-split: Samsung

Post-split: Orange and Pear
Score: 2 Votes (Like | Disagree)
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48 months ago

Stop copying? Where have you been for the last few years. The s7 and s7 edge what is that copied from?

Seems to me that maybe Apple should not copy but they are next year with the same type of curved display.

Agree 100%, Apple haven't had an innovative idea for ages now, their iOS has slowly 'borrowed' ideas from Android (for the better) while the phones have stagnated for the past three generations now.

As stated above, the Mac line is just bobbing along on the surface both design wise and innovatively.

This coming from a die hard Apple fan too, they're long overdue a fresh injection of ideas.
Score: 2 Votes (Like | Disagree)

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