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Investors press Samsung to split into two companies

Published 05/10/2016

Samsung's Galaxy Note 7 was recalled amid reports it kept bursting into flames (Samsung/PA)
Samsung's Galaxy Note 7 was recalled amid reports it kept bursting into flames (Samsung/PA)

Samsung is being pressured by investors to break up the business to help usher in a better return for shareholders.

The smartphone and technology giant has been told by affiliates of Elliott Management that a restructure is needed to put its share price in the same league as its closest rivals.

In a letter to the Samsung Electronics board, Blake Capital and Potter Capital said the tech heavyweight should split into two companies - an operating firm, Samsung Opco, and a holding company, Samsung Holdco - and pay out a special cash dividend of 30 trillion Korean won (£21.1 billion) to shareholders.

It also wants Samsung Opco to list on the Nasdaq stock exchange and add three independent directors to the board.

Blake Capital and Potter Capital own 0.62% of Samsung Electronic shares.

The letter states: "Despite being an impressive leading global technology company, Samsung Electronics' ordinary shares typically trade at steep valuation discounts (c. 30% to 70%) when compared to the company's closest peers.

"The Samsung Electronics Value Enhancement Proposals are designed to address that steep valuation gap and be a basis for the sustainable enhancement of shareholder value for the benefit of all stakeholders."

The move comes as Samsung grapples with a global recall of its Note 7 smartphone after multiple reports of the device overheating and catching fire.

The South Korean firm said at the end of September that it was "confident" it had solved the battery issues and would relaunch the device in the UK at the end of October.

Samsung also confirmed last month that Lee Jae-yong, the only son of its ailing chairman, had been nominated to join the Samsung Electronics board of directors.

The 48-year-old Harvard-educated vice chairman at Samsung is thought to have been making key decisions for Samsung since his father Lee Kun-hee, 74, fell ill.

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