Samsung considering advice to split in two

Samsung considering advice to split in two

The plans come after USA hedge fund Elliot Management, which owns 0.6 percent of Samsung, called for a managed split of the company last month.

"Even if Samsung Electronics does not comment on specifics such as the timing of a split. the firm will at least say it will implement ownership structure changes in a reasonable manner", HI Investment said in a report on Monday.

Yesterday, we reported that Samsung Electronics is thinking of splitting into two companies.

A holding company is one that owns other companies' stock. The Korean Exchange is eager to know Samsung's decision and it has requested that the company make it aware of the outcome of the meeting by 6pm GMT.

Restructuring pressure was building following the Note 7 fiasco. The U.S. activist hedge fund, which tried unsuccessfully to stop a controversial merger of two Samsung companies a year ago, urged Samsung to review splitting it up into a holding company and an operating company, to list in the U.S. stock market and to add three independent board members.

In a conference call after the announcement, Samsung's chief financial officer, Lee Sang-hoon, told investors that the company has no plans to consider a merger between a holding company and Samsung C&T at the moment. That's the higher tier of the previous plan to return somewhere between 30 to 50 percent of its cash-flow, which would translate into over eight billion US dollars for this year.

The South Korean technology giant said it could continue to buy back more shares and also announced plans to raise dividends.

The cash returns will include a 30 percent increase in its total dividend this year, a continuation of the share buyback programme from January 2017, and the introduction of quarterly dividend payments from April 2017.

At September's end, Samsung had a little more than 70 trillion won in cash on hand after debt is subtracted. Any excess cash beyond its target balance will be returned to shareholders.

"In particular, there is some disappointment as Samsung will review a shift to a holding company structure for six months, prompting shares of Samsung C&T to tumble", he said.