It is reported that Samsung Electronics decided to spin off itself and will announce the direction in a board meeting on November 29. As Lee Jae-yong appointed as a registered director last month came forward in management, he will succeed in the succession of management rights and accelerate the restructuring of the governance structure through a split-up of Samsung Electronics.
Samsung also reportedly made up its mind to partially accept an increase in dividends demanded in its letter to Samsung Electronics by Elliot Management, a hedge fund, on October 5.
“Samsung Electronics decided to hold a board meeting on November 29,” said a high-ranking representative of the business world who is familiar with Samsung. “The will clarify their position that we will consider a split-up, a core item on corporate governance restructuring.”
This means that they will present a mid- to long-term roadmap at the board meeting, even if they do not mention specific details such as the timing and proportions of a split-up. In the end, it is only a matter of time and Samsung Electronics will be spun off.
It is forecast that a split-up of Samsung Electronics will speed up as opposition parties, which took control of the National Assembly as a majority is expected to bring in a regular session of the National Assembly bills to put a pressure on business activities such as restricting treasury stock use in split-ups, an amendment of the commercial law and an increase in the corporate tax.
Vice chairman Lee Jae-yong will strengthen his control of the Samsung Group as a result of a split-up. The vice president currently owns a 0.59% stake in Samsung Electronics. Adding shares of chairman Lee Kun-hee, specially related persons and affiliates and related affiliates, Lee Jae-yong’s equities stand at 18.2 percent. Foreign shareholders’ equities exceed 50 percent, which means that a dispute over the managerial right to Samsung Electronics can happen at any time. If Samsung Electronics splits itself up, the company is divided into an investment company (holding company) and a business company. Vice president Lee can increase his stake in the holding company through in-kind investment which gives the business company shares of the business company to the holding company and then receives new shares of the holding company.
Samsung Electronics’s move to split itself up and found a holding company is expected to have a significant impact on other companies such as Hyundai Motor, Lotte, and Hyundai Heavy Industries, which are taking steps to transfer management rights
Samsung Electronics will also announce its position regarding a shareholder proposal which Elliot Management sent in a letter on November 5 at the coming board meeting. Elliot demanded a special dividend of 30 trillion won, a listing of Samsung Electronics on the NASDAQ, and the appointment of three independent directors in addition to a split-up of Samsung Electronics.