Pressure on Samsung has been mounting since the storm that surrounded its Galaxy Note 7, and the company on Tuesday finally bowed to calls from investors to consider restructuring itself.
Samsung says it will bring in “external advisors to conduct a through review of the optimal corporate structure,” adding that the review itself doesn’t reflect what the South Korean electronics giant, or its board, intend to do.
A possible outcome from the review could be that Samsung goes along with what activist shareholder Elliott Management has been demanding for some time, and split itself into a holding unit and an operating company.
The company said it would look at ways to optimize long-term value, including “the possibility of creating a holding company structure.”
Samsung’s lengthy statement details how it was already planning to give more cash back to shareholders, and that it would increase total dividends in 2016 by 30% year-on-year, bringing the annual dividend amount to 4 trillion won ($3.4 billion). It’ll also pay out half of its free-cash flow to shareholders in 2016 and 2017 – which is at the top of the 30-50% range it had earmarked for 2015.
The statement represents something of a coup for Elliott Management, who has been agitating for change at Samsung for several years now. Last year the hedge fund tried to block Cheil Industries, a holding company for the Lee family which largely controls Samsung, from buying Samsung’s building subsidiary for $9.3 billion.
Though Elliott, led by New York-based billionaire Paul Singer, failed in that instance in 2015, it has continued to argue that Samsung needs to return more cash to shareholders, pointing out that the company has nearly $70 billion on its balance sheet. Restructuring would also make Samsung more transparent and straightforward to value.
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