Samsung Electronics might be heading for a split

Samsung to raise the dividend to shareholders for 2016 by 36%
Source- Reuters
Source- Reuters

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Samsung Electronics has said it is considering splitting in two, to allow heir-apparent Lee Jae-yong to take over the firm from his father, Lee Kun-hee, and address governance concerns, as reported by The Guardian.

The move comes as it struggles to contain the consequences from a global recall of its Galaxy Note 7 smartphone prompted by exploding batteries.

Samsung said in a statement it would consider breaking the company into a holding firm and a producing and operating unit. It would take at least six months to study the option.

U.S. activist hedge fund Elliott Management(which owns 0.6 percent of Samsung) proposed a split in October to boost shareholder value. According to FirstPost reports, the hedge fund wants Samsung Electronics to divide into a holding vehicle for ownership purposes and an operating company, pay a $26 billion special dividend, pledge to return at least 75 per cent of free cash flow to investors and agree to appoint some independent directors.

 

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