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Samsung Is Being Forced To Split Its Business In Half

By Luis Fran , Nov 28, 2016 07:42 PM EST
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Samsung Electronics could be about to split its company in half, just as the U.S. hedge fund management firm Elliott Management -which owns 0.6 percent of it- proposed it to the South Korean giant last month. The changes announce could be made by Tuesday and many believe that it could boost the amount of profit returned to the investors and that the split would leave a holding company and an operating one.

Splitting In Half Will Strengthen The Lee Family´s Grip On Samsung

According to the International Business Times, far from being bad news for the Lee family, splitting the company in half would allow them to increase their power and influence in Samsung, which actually gained much more power when Lee Jae-Yong joined the board in October. By its part, Elliott´s intentions are that the South Korean giant have a part exclusively dedicated to ownership purposes and another that only focus on operations, and in addition to the free cash flow to the investors, it would agree to appoint some independent, directors.

Although this has been surprising news for many, the truth is that the scenario of Samsung splitting in half has been subject of market speculation since months, with analyst noting that this kind of move would definitely strengthen the Lee family´s grip on the company, which is not precisely something good for them.

Until 6pm To Make A Final Decision

Regarding this situation, the head of corporate governance at Aberdeen Asset Management Asia, David Smith, told to Reuters that although the most important thing is that this chances ended up being beneficial to all the parties involved, Elliot´s proposals seems to be extremely difficult to argue with, considering that he believes that is always preferable a simpler structure.

Samsung´s directors' board will decide Elliot´s proposals on Tuesday, in order to determine if the company will remain the same, or it would split in half. The South Korean giant will have only until 6pm GMT to clarify its final decision. Although it is not known what will go to happen, it seems that Samsung´s is completely entering into a whole new era, which started since the "Crown Prince" joined the board last month.

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