Samsung Restructuring Efforts Could Split Company In Two And Boost Shareholder Value
Following a rough quarter in which Samsung's bottom line took a hit due to a global recall of Galaxy Note 7 devices, the South Korean electronics maker now finds itself in a restructuring effort. It is also being pressured to split its operations into to two so that it can provide more payouts to shareholders. Whether it is seriously considering a split is something that Samsung will presumably address tomorrow when it discloses plans to boost the company's stock price.
Calls for Samsung to split originated from Elliott Management, a U.S. hedge fund that has a 0.6 percent stake in the company. Specifically, Elliott Management proposed in October that Samsung split into a holding firm and an operating company, along with making a 30 trillion won (around $26 billion) payout to shareholders as part of a special dividend.
Samsung is reportedly considering a split, though people with inside knowledge of Samsung's plans are reluctant to share much of what is talked about behind closed doors.
Market analysts seem to be on board with the idea of splitting, as it would create a simpler structure and put Samsung in a position to pay more out to investors. Samsung is probably more receptive to the idea now than it was before the Galaxy Note 7 debacle, as it doesn't want to scare away investors who have stuck with the company through troubled times.
It's not just the Galaxy Note 7 that has put Samsung in a tough spot. Samsung also recalled 2.8 million washing machines recently, and a political scandal led to the company's offices in Seoul being raided on two different occasions. Those of the sort of things that can make an investor nervous.
Meanwhile, Samsung's been on somewhat of a selling spree as it looks to narrow its focus on profitable products and services. It sold its printer unit to HP for just $1 billion in September and now there is talk of Samsung selling its PC business to Lenovo.
Calls for Samsung to split originated from Elliott Management, a U.S. hedge fund that has a 0.6 percent stake in the company. Specifically, Elliott Management proposed in October that Samsung split into a holding firm and an operating company, along with making a 30 trillion won (around $26 billion) payout to shareholders as part of a special dividend.
Samsung is reportedly considering a split, though people with inside knowledge of Samsung's plans are reluctant to share much of what is talked about behind closed doors.
Market analysts seem to be on board with the idea of splitting, as it would create a simpler structure and put Samsung in a position to pay more out to investors. Samsung is probably more receptive to the idea now than it was before the Galaxy Note 7 debacle, as it doesn't want to scare away investors who have stuck with the company through troubled times.
It's not just the Galaxy Note 7 that has put Samsung in a tough spot. Samsung also recalled 2.8 million washing machines recently, and a political scandal led to the company's offices in Seoul being raided on two different occasions. Those of the sort of things that can make an investor nervous.
Meanwhile, Samsung's been on somewhat of a selling spree as it looks to narrow its focus on profitable products and services. It sold its printer unit to HP for just $1 billion in September and now there is talk of Samsung selling its PC business to Lenovo.
