Samsung backs away from restructuring plan
SEOUL : The world’s biggest smartphone maker, Samsung, assailed by a shambolic recall and embroiled in South Korea’s wideranging corruption scandal, yesterday backed away from a planned corporate restructuring.
Following the embarrassing recall of the Galaxy Note 7 smartphone and under pressure from activist shareholders to improve corporate governance, Samsung Electronics said last year it was considering splitting the company in two.
Its vice-chairman Lee JaeYong, heir to the parent Samsung group, has since been arrested and indicted for bribery, along with four other senior executives, in connection with the graft scandal that saw ex-president Park Geun-Hye impeached.
But at the Samsung Electronics annual general meeting, here, co-vice chairman and co-chief executive officer Kwon Oh-Hyun said the firm had reviewed legal and tax issues around proposed division into a holding company and an operating unit, and identified “some negative effects”.
He did not elaborate, but told shareholders: “At this moment, it seems difficult to carry it out.”
Shares in Samsung Electronics — the group’s flagship subsidiary — sank 1.4 per cent in morning trade, having hit record highs this year on expectations of higher profits. Samsung SDS and Samsung C&T were down more than six per cent.
A promised new governance