South Korea’s Samsung, under pressure from American activist investors looking for more returns, is preparing the biggest shake-up of the company in its 47-year-history.
The world’s top maker of smartphones, memory chips and televisions is considering creating a holding company and raising dividends, and has hired independent experts to conduct a six-month review.
“Samsung’s moving to a holding company structure is what investors had already had in mind, so it was not a surprising matter. Samsung’s movement has been noted in the market and priced in already. That’s why today’s Samsung stock moved strongly but closed flat,” said IBK Securities’ Kim Jang-Won.
Still essentially a family-run firm, 74-year-old Samsung Group patriarch Lee Kun-hee has been in hospital since 2014 following a heart attack, and the company is run by son Jay Y. Lee. But when his father dies he and his two sisters will be hit by a multi-billion euro inheritance tax bill.
The company has a complex ownership structure, and critics say it manages cash poorly and has poor corporate governance, explaining why its shares are cheap compared to its rivals.
Smaller investors in particular feel they are not getting value for money, and analysts say a restructuring would be a way to increase investor returns.