Samsung is currently deciding whether or it not it should follow the advice of the US hedge fund management firm Elliott Management that has proposed that the company split its business in two with one holding company for ownership and another for operations.
Elliott first proposed the split in October with the aim of boosting shareholder value. However, this move would also benefit the Lee family that owns Samsung as it would grant them tighter control over the company.
The proposal will be decided on by the company's board of directors on Tuesday 29 November. The Korean Exchange is eager to know Samsung's decision and it has requested that the company make it aware of the outcome of the meeting by 6pm GMT.
If Elliott's proposal is accepted by the board, it will see Samsung divided under two separate holding companies with one focusing on ownership and the other on operations. The company will also pay a $26 billion special dividend to investors and will agree to return at least 75 per cent of its free cash flow back to them. Samsung will also appoint some independent directors as part of the proposal.
In May 2014, Lee Kun-hee suffered a heart attack and his son Jay Y Lee took over as head of the company. Last year, he gained even more responsibility within Samsung when he took over as head of two key foundations. Jay Y Lee then assumed even more power within the company when his father was admitted into hospital and since then he has made all of the major decisions for the conglomerate.
HI Investment offered further details on Samsung's possible split, saying: “Even if Samsung Electronics does not comment on specifics such as the timing of a split … the firm will at least say it will implement ownership structure changes in a reasonable manner.”
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