Samsung Electronics considers restructure following pressure from shareholders

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Samsung Electronics has revealed that it is considering splitting the company into two following pressure from investors.

Stakeholder Elliott Management last month criticized the Korean firm’s structure which it believes prioritizes the Lee family, which owns the Samsung Group, over its shareholders. In a statement released Monday, Samsung Electronics said it is assessing whether to implement a new corporate structure — which could see the establishment of a holding company — and the potential to list on additional stock exchanges worldwide.

Samsung Electronics is working with “external advisors” to look over the possibilities, it said.

Critics argue that the current structure makes it hard to value Samsung Electronics since its assets are intertwined with sister companies and affiliates. A straight split would bundle those relationships into the holding firm, leaving the Samsung Electronics business easier to assess.

In other measures, Samsung Electronics will also increase returns to share holders by one-third, return half of its free cash over the next two years and accelerate its share buy-back program. It said it is seeking to add at least one new board member with CEO experience before its annual meeting in March 2017.

These changes are aimed at appeasing shareholder concern, but some analysts have argued that a revamped structure could favor Lee Jae-Yong, Samsung’s heir apparent who was recently nominated for a board seat.

Samsung’s 2016 started with promise following the release of the much-heralded Galaxy S7 and S7 Edge smartphones but it ended with a bang — quite literally — as the Galaxy Note 7 was retired over safety concerns following cases of explosive batteries. That saga impacted the company’s profits and reputation, and, while it has focused on investor discontent, it remains to be seen how Samsung will address its brand among consumers in 2017.