Samsung shareholder value

Samsung is currently going through many challenges primarily because of the Note 7 battery explosion incidents, which caused a significant financial loss to this company. Not only the fans of Samsung are criticising this company but its shareholders are also raising questions regarding its leadership, and they want this group to be divided into two separate organisations.

After the United States activist hedge fund Elliott Management, which holds 0.6 percent of Samsung, proposed a split to boost the shareholder value, the South Korean electronics company has now said that it will soon unveil the plans to increase the shareholder value.

Recently, reports started circulating in the media that the hedge fund wants Samsung Electronics to split into a holding vehicle for ownership purposes and an operating organisation, pay a $26 bln special dividend, pledge to return a minimum 75 percent of free cash flow to investors and agree to appoint some independent directors.

“It’s difficult to argue with the logic of Elliott’s proposals,” said David Smith, head of corporate governance at Aberdeen Asset Management Asia. “A simpler structure is certainly preferable, and yes most would agree they can afford to pay out more.

The rumours about the split of this organisation were already popping up on the social media websites; the analysts also said that if Samsung divides itself into two halves, the company would become stronger and would stay as the world’s top smartphone manufacturer.

“What is important is that these changes should benefit all involved, including Samsung group founding the family, and minority shareholders, said David Smith.

There are some speculations that if Samsung splits itself, both the customers and the shareholders will enjoy the benefits from one the world’s largest electronics maker.

On the other hand, the Chief Executive of Samsung Electronics has said that the company must learn from the crisis. He did not refer directly to the Note 7 explosions but stated that the staff at the company should look back and think if they were satisfied with their work.


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