US activist hedge fund Elliott Associates sent a restructuring proposal to Samsung Electronics last year and called on the company to be split into two. It proposed setting up an operating and a holding company and listing the latter on external exchanges in order to grow shareholder value. Samsung said that it was studying the proposal and would have an answer in a few months. At its annual shareholder meeting today, Samsung Electronics Chief Executive Kwon Oh-hyun announced that Samsung is not going to adopt a holding company structure for now.
Reports suggest that this is likely going to hurt investor sentiment for some time who were hoping that the ongoing review of the company's organization will lead to Samsung going for a split. Samsung continued to study the proposal even though it's going through a leadership crisis as its leader is currently behind bars.
Without going into too much detail, Kwon said that “There are negative effects that would arise from transitioning to a holding company so it does not appear it will be easy to do so at present.” The review isn't over, though, but Samsung has confirmed now that a transition is not going to be swift and it's not going to happen in the near future.
