New | Samsung should be broken up into two companies: US-based activist investor Elliott Management
Elliott urges listing of company in exchange like Nasdaq
Samsung Electronics Co. is being urged by activist investor Elliott Management Corp. to restructure a business that spans Galaxy smartphones, televisions, semiconductors, screen displays and other consumer electronics.
In a 10-page letter and 31-slide deck released publicly and to Samsung’s board on Wednesday, affiliates of Elliott -- Blake Capital LLC and Potter Capital LLC -- called on the company to streamline and break into two, dual-list its operating company on a US exchange such as Nasdaq, pay shareholders a special dividend of 30 trillion Korean won (US$27 billion) as well as ongoing regular dividends, and improve governance by adding three independent board members.
Separating Samsung into an operating company and a holding company would deliver both organisational and tax benefits, while simplifying now-complex family holdings and treasury stock that are an overhang on Samsung’s valuation, according to Elliott.
Dual-listing the separated operating company on Nasdaq would boost trading volumes and allow more international investors exposure to the core electronics business, helping Samsung trade higher, Elliott said.
The detailed proposal comes at a critical time for the South Korean electronics conglomerate. The company has been operating without longtime Chairman Lee Kun-Hee, who has been hospitalized, while also trying to navigate the aftermath of the troubled launch of its latest Galaxy Note smartphones, which had to be recalled after batteries were bursting into flames.