Sam­sung backs away from re­struc­tur­ing plan

New Straits Times - - Business -

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

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