Samsung may be preparing to split in two — reports surfaced early this morning that the company would announce some big changes to its business that could boost the profit returned to shareholders. The split would involve the creation of one holding company and one operating company.
Samsung has had its fair share of problems over the past few months, the biggest of which has been the massive and failed recall of the Galaxy Note 7. On top of that, the company recalled a whopping 2.8 million washing machines, and Samsung’s offices in Seoul has been raided twice because of a political scandal in South Korea. All this has led investors to grow a little concerned about how Samsung is managed.
More: Following Galaxy Note 7 debacle, Samsung’s battery-making arm isn’t doing very well
The result of all these issues? In the company’s earnings report for Q3 2016, it listed $4.5 billion in operating profit — which is down a hefty 30 percent year-over-year and represents its worst quarter in two years.
The news that the company would split actually comes after a New York-based hedge fund called Elliot Associates publicly proposed that Samsung split into two, essentially giving shareholders a dividend that would amount to $27 billion. Elliot, which owns a 0.6 percent stake in Samsung, also proposed that the company add three independent board members, as well as list shares on the U.S. stock market.
The move would be an interesting one — Elliot Associates and the Samsung-founding Lee family have a somewhat strained relationship after a proxy battle in 2015, in which Elliot Associates accused Samsung of proposing a merger of Samsung and Chiel Industries — which the Lee family also owns — in order to consolidate its power over Samsung Electronics.
Samsung has yet to publicly confirm a split, however, it is set to hold a conference call at 9:30 a.m. local time on Tuesday, or 4:30 p.m. PT on November 28 to discuss management changes in detail.