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Samsung May Restructure to Become Two Companies

Samsung today announced its plans to consider splitting its company in two in a bid to deal with shareholders unrest in the wake of the South Korean tech firm’s Galaxy Note 7 debacle.

The company plans to bring in “external advisors to conduct a through review of the optimal corporate structure,” to determine if it should create a holding company and list on a U.S. stock exchange, Samsung said in a press release.

Oh-Hyun Kwon
Oh-Hyun Kwon

The review, which is expected to take at least six months, does not “indicate the management or the board’s intention one way or another,” Samsung added. If Samsung does break into two entities, however, it will be following the advice of activist shareholder Elliott Management, which has been urging the company to restructure into a holding unit and an operating company for quite some time.

Samsung also announced it would be handing more cash back to shareholders, and would increase total dividends this year by 30 percent year-on-year, making the annual dividend amount $3.4 billion. The firm will also allocate 50 percent of free cash flow to shareholder returns, which is at the top of the 30-50 percent range announced in 2015.

Samsung has also pledged to review its cash position every three years, when it comes to business and economic developments, and return any excess cash beyond the target balance to its investors.

“We are committed to enhancing sustainable long-term value for our shareholders and to remaining good stewards of capital,” Samsung CEO Dr. Oh-Hyun Kwon said. “Today’s announcement extends the actions we initiated last year and represents the next phase in the evolution of our shareholder policy and governance.”

Samsung’s announcement comes some three months after the company issued a global recall of its Galaxy Note 7 Smartphones and a month-and-a-half after announcing it would permanently end production of the device.

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Jennifer Cowan

Jennifer Cowan is the Managing Editor for SiteProNews.