Samsung Electronics is reportedly considering a decision that could see the South Korean behemoth split into two smaller companies, in a bid to more profitably take on its rivals in the smartphone market, most notably Apple, according to Reuters.
The move, which would see Samsung Electronics divided into a holding company and an operating company, would allow Samsung to more easily return up to 75 percent of its free cash flow to investors. It’d also allow a one-off lump payment of $26 billion by special dividend.
While there’s no confirmation of the decision to split as of now, Samsung is expected to make a decision publicly some time on Tuesday. The suggestion initially came from the hedge fund Elliott Management with the aim of increasing shareholder value. Even without a formal decision at this time, Samsung Electronics been gradually simplifying its corporate structure while selling off non-core assets.
Splitting the company could also help appease shareholders who have struggled through 2016, unhappy at the multiple raids of Samsung’s head office in Korea as part of an investigation into a political scandal and the disastrous Note 7 launch and subsequent recall.
Whether Samsung Electronics really wants to or not, investor appetite for the split is certainly growing.
Do you think Samsung’s brand has lost its shine in 2016? Do you think a split would sufficiently appease unhappy shareholders? Let us know in the comments below.
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