Samsung might consider financial restructuring

Tech giant Samsung Electronics said on Thursday it will carefully review proposals made by US hedge fund Elliott Management for restructuring and a special dividend, pushing the firm's shares to a record high.

The activist investor sent a letter to the world's No. 1 smartphone maker on Wednesday, spelling out changes that include splitting into a holding company and listing its operating company on the Nasdaq stock exchange. Samsung said in a statement that it would carefully consider the proposals, adding the firm “believes in a constructive and open dialogue with investors with a view to maximising shareholder value.”

Samsung shares jumped as much as 5% to mark a new high in morning trade, outperforming a 0.6 rise for the broader market.

Elliott's latest activist target is in the middle of a leadership succession and is under pressure after issuing an unprecedented recall of at least 2.5 million Galaxy Note 7 smartphones last month.

Samsung's willingness to consider Elliott's proposals helped the stock shrug off renewed concerns about the recall after owners of a replacement Note 7 said its battery had begun smoking in US plane.

This has prompted fresh investigations by the Consumer Product Safety Commission and the Federal Aviation Administration. Samsung said it was working to recover the device and that it cannot confirm whether the device in question is a re- placement Note 7 until it can retrieve it.

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Elliott, founded by billionaire Paul Singer, owns 0.62% of Samsung's shares. The $27 billion hedge fund also called into question Samsung's corporate governance and said the family- run company should add three new independent directors to its board. Elliott said the new holding company should look at a possible all-stock merger with Samsung C& T— a subsidiary that the New York hedge fund targeted in a heated shareholder battle last year. Elliott ultimately failed to derail Samsung C&T's merger with sister firm Cheil Industries.

Samsung C&T declined to comment on Elliott's merger proposal. US hedge funds rarely target foreign companies for activist campaigns. Other than Third Point, a hedge fund active in Japan, Elliott is the only major U.S. activist with a significant presence in Asia. REUTERS