If dissident shareholder Elliot Management gets its way, big changes could soon be coming to South Korean electronics giant Samsung (OTC:SSNLF).
The hedge fund--which currently owns just 0.6% of Samsung shares--is pushing the company to make several changes to boost shareholder value. Samsung has announced it plans to host a conference call on Tuesday to discuss changes with shareholders, a call many expect will include an announcement to split the company into operational and holding parts.
There are a number of advantages to splitting the company in two. Samsung has many different subsidiaries, including the well-known electronics division, as well has manufacturing cars, substantial real estate holdings, and owning a Korean Baseball League team. Having two companies would also more easily allow family heirs boost their ownership stake in the company.
Elliot Management has also called for more changes, including appointing independent directors to the board of directors, and returning at least 75% of free cash flow back to investors through increased dividends. Elliot also wants the company to pay at least 30 trillion won ($26 billion) as a special dividend to shareholders. Investors are less optimistic these changes will be made.
Samsung is currently dealing with the fallout from two different recalls. It was forced to pull all Galaxy Note 7 smartphones off the shelf after multiple reports of the battery exploding while charging. It followed that up shortly after by recalling 2.8 million washing machines.
Investors liked the news, sending Samsung shares 1.6% higher on the Korean Stock Exchange.
