Samsung considers splitting into two

Samsung Electronics said Tuesday it was considering splitting the company into two as it faces growing pressure to overhaul its governance. (AP)

Samsung Electronics said Tuesday it was considering splitting the company into two as it faces growing pressure to overhaul its governance during a crucial power transfer in top management.

The announcement came as the South Korean electronics giant is seeking to ensure a smooth succession to Lee Jae-Yong, the firm’s vice chairman and scion of the parent Samsung group’s founding Lee family.

It is also struggling to contain the fallout from a global recall of its Galaxy Note 7 smartphone caused by exploding batteries as well as a snowballing political scandal in South Korea.

The firm said in a statement it would consider breaking into a holding firm and a producing and operating unit, and would take at least six months to study the option.

It also said it would increase its dividend payout to shareholders to more than 4 trillion won ($3.4 billion) this year, up more than 30 percent from a year ago.

Other options on the table include plans to nominate at least one new independent board member with “global corporate experience” for approval at an annual shareholders’ meeting next March.

The plans suggest the firm is listening to calls for change after US hedge fund Elliott last month urged it to divide into listed holding and operating firms to streamline a byzantine ownership structure.

The US firm also called for an increase in share dividends, the addition of new independent board members and a listing in New York.

The Lee family controls the vast Samsung group -- the South’s top business group -- through a web of complicated cross shareholdings among its units including the flagship Samsung Electronics.

“Samsung addressed a strong determination to overhaul its governance structure,” said Lee Sang-Hun, analyst at Hi Investment & Securities.

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Last Update: Wednesday, 20 May 2020 KSA 09:48 - GMT 06:48
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