Major Samsung Electronics reorg imminent amid existential crisis

The serious-yet-perpetually-hilarious fire burning around Samsung’s fudged Note 7 crises, coupled with growing political scandal, has allegedly forced Samsung to consider divvying up its Electronics biz.

Top brass from Samsung and activist investors will be having a very serious conference call tomorrow morning to discuss the future structure of the division. Samsung has confirmed the call via its Investor Relations services, which has been positioned as a “Samsung Electronics Strategic Update”. No additional information has been publicly disclosed at this stage – which usually suggests some serious shiz is going down.

According to Bloomberg sources, which are usually bang on the money, shareholders are extremely dissatisfied at the sequence of events which led up the Note 7 saga, which just keeps on burnin’. In addition, the company has been left feeling particularly sore after having had its Korean HQ raided multiple times in recent months in connection to a political scandal involving the electronics firm and the current president of Korea Park Geun-hye.

As such, investment firm Elliot Management Corp has suggested a radical reorganisation of Samsung Electronics, including a special dividend pay out to shareholders of roughly $26 billion and a separation into an operating company and a holding company. This, according to Bloomberg, is a notion which is gaining traction with investors of Samsung, who are publicly beginning to voice their support for change – with one particular investor using lovely hyperbolic and fearmongering claims.

“We think Samsung in its current structure faces certain existential threats,” said Daniel O’Keefe, MD of Artisan Partners. And he didn’t stop there…

“We agree with Elliott’s proposals. Its governance, board and management structure is not well suited to the rapidly changing and highly competitive technology industry. Its board of directors has no truly independent members with experience in global operations, technology and capital allocation.”

The general gist is that change is in the air, but it could also be the case that investors just want some cash back from a Samsung which is spinning juicy profits out every quarter.

“Certainly Samsung’s cash flow is very strong and balance sheet is very, very healthy,” said David Smith from Aberdeen Asset Management Asia. “Could they afford to pay out more? Sure.”

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