New York (AFP) – US hedge fund Elliott Management called Wednesday for South Korean industrial and technology giant Samsung Electronics to be split in two to unlock billions of dollars in value for shareholders.
Arguing that the company suffered from a long-term undervaluation in the equity market even before the September smartphone recall to address an exploding-battery problem, Elliott called on the company to divide separately listed holding and operating companies.
“We see this as a defining moment and a tremendous opportunity for the forthcoming new leadership of Samsung Electronics to further advance the company’s remarkable legacy,” said a letter from two Elliott units, Blake Capital and Potter Capital.
Blake and Potter together hold 0.62 percent of Samsung Electronics.
“Now is the time for real shareholder value, corporate governance and transparency improvements, which we believe will help Samsung Electronics achieve an equity market valuation that properly reflects its first-class portfolio of businesses.”
In a presentation with the letter, Elliott stressed that the powerful Lee family, which runs the massive Samsung industrial conglomerate, would retain its interest after the proposed restructuring.
The proposal “would benefit all stakeholders by creating a transparent and easy-to-value organizational structure, retaining the Lee family’s controlling interest,” it said.
Samsung should also implement a special cash dividend of 30 trillion South Korean won, equal to about $27 billion, the letter said.
Elliott said the makeover would allow Samsung, currently a maze of listed and unlisted companies with a notoriously opaque ownership and management structure, to achieve a major international equity listing, something it currently lacks.
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