Samsung plan to boost value falls short of goals
SAMSUNG Electronics Co. is demonstrating it is finally willing to be responsive to shareholder calls for change. But not that responsive.
Elliott Management Corp. began campaigning last month for an overhaul of Samsung Electronics as the company was struggling to contain the fallout from battery fires in its Note 7 smartphones and preparing for heir apparent Jay Y. Lee to assume greater control of the family enterprise. Last year, Elliott lost a fight to prevent a merger of two units within the conglomerate, Cheil Industries Inc. and Samsung C&T Corp.
Now, it appears that Elliott will have to wait longer for broad change at South Korea’s most valuable company. Samsung said it will add at least one outside director next year, while the investor had sought three independent directors. Samsung will use 50 per cent of free cash flow in shareholder returns for this year and next, indicating a return of about 9.5 trillion won ( RM36.5 billion) in 2016. Elliott had sought a special dividend of 30 trillion won.
Billionaire Paul Elliott Singer, who leads Elliott, had also pushed for Samsung to separate into an operating company and a holding company, and list shares on a US exchange. The Suwon, South Korea-based company said it will spend at least six months looking at such a structure and foreign listing – without promising any definite change. The review doesn’t include the Samsung C& T merger, the company said.
“The restructuring guidance fell short of investors’ expectations,” said Park Kangho, analyst at Daishin Securities Co. “The announcement wasn’t strong enough to offer a further boost to the shares.” Samsung shares, which are up more than 33 per cent this year, were unchanged at the close in Seoul.
A representative for Elliott didn’t have an immediate comment on Samsung’s announcement. Blake Capital and Potter Capital , affiliates of Elliott, said they owned about 0.6 per cent of Samsung Electronics when they announced their push for change on Oct 5. — WPBloomberg