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Samsung Electronics mulls over restructuring: 5 things to know

Samsung Electronics Co Ltd said it is considering whether to create a holding company as part of a corporate restructuring review

Reuters  |  Seoul 

A man walks at the Samsung Electronics' headquarters in Seoul
A man walks at the Samsung Electronics' headquarters in Seoul

Tech giant Co Ltd said on Tuesday it is considering whether to create a as part of a corporate review.

Following are some details on the deliberations and implications of any change implemented:

What is a holding company?

A is one that owns other companies' stock. Holding companies typically do not run their own businesses and are used to control various affiliates or subsidiaries.

South Korea's government is pushing local conglomerates to gradually move to a structure to improve transparency and corporate governance.

Some of the country's biggest conglomerates such as LG Group have established a in order to streamline their ownership structure.

Why would consider such a move?

and analysts have long suspected that will move to split itself into an ownership company and an operating company as part of a complicated set of steps to boost Jay Y. Lee and other Group founding Lee family heirs' control of the conglomerate's top company.

While did not comment on how it might transition to a structure, analysts say could engineer a split in a way that existing shareholders are left with in both the ownership company and the operating company.

Samsung's then can offer its own to in exchange for in the operating company. This would boost the ownership company's stake in the operating company while providing a way for the Lee family and other Group affiliates to raise their stake in the ownership company.

Why now?

U.S. activist hedge fund Elliott Management, which owns 0.6 per cent of Samsung, in October proposed that be split in two as part of a wide-ranging set of proposals the fund says will boost shareholder value.

said last month it would respond to Elliott's proposals by the end of November.

How would such a benefit investors?

Elliott has argued such a move would help streamline Group's complicated ownership structure and improve transparency, thus improving valuation of Samsung.

Some say may boost payouts once the Lees and other affiliates have bolstered their ownership of the company. Jay Y. Lee and his two sisters face a multi-billion dollar inheritance tax burden in the event their father and Group patriarch, 74-year-old Lee Kun-hee, passes away. The elder Lee remains incapacitated following a May 2014 heart attack.

Increased payouts following a would also benefit Samsung's other investors.

What are the potential obstacles?

executives said on Tuesday they need to consider various potential implications of moving to a structure, such as potential changes in how the company would be taxed and other regulatory requirements.

South Korean laws also mandate a must own at least 30 per cent of its publicly traded affiliates. would need to buy additional in companies such as SDI Co Ltd, Electro-Mechanics Co Ltd and SDS Co Ltd to meet such requirements, which could cost it billions of dollars.

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Samsung Electronics mulls over restructuring: 5 things to know

Samsung Electronics Co Ltd said it is considering whether to create a holding company as part of a corporate restructuring review

Samsung Electronics Co Ltd said it is considering whether to create a holding company as part of a corporate restructuring review

Tech giant Co Ltd said on Tuesday it is considering whether to create a as part of a corporate review.

Following are some details on the deliberations and implications of any change implemented:

What is a holding company?

A is one that owns other companies' stock. Holding companies typically do not run their own businesses and are used to control various affiliates or subsidiaries.

South Korea's government is pushing local conglomerates to gradually move to a structure to improve transparency and corporate governance.

Some of the country's biggest conglomerates such as LG Group have established a in order to streamline their ownership structure.

Why would consider such a move?

and analysts have long suspected that will move to split itself into an ownership company and an operating company as part of a complicated set of steps to boost Jay Y. Lee and other Group founding Lee family heirs' control of the conglomerate's top company.

While did not comment on how it might transition to a structure, analysts say could engineer a split in a way that existing shareholders are left with in both the ownership company and the operating company.

Samsung's then can offer its own to in exchange for in the operating company. This would boost the ownership company's stake in the operating company while providing a way for the Lee family and other Group affiliates to raise their stake in the ownership company.

Why now?

U.S. activist hedge fund Elliott Management, which owns 0.6 per cent of Samsung, in October proposed that be split in two as part of a wide-ranging set of proposals the fund says will boost shareholder value.

said last month it would respond to Elliott's proposals by the end of November.

How would such a benefit investors?

Elliott has argued such a move would help streamline Group's complicated ownership structure and improve transparency, thus improving valuation of Samsung.

Some say may boost payouts once the Lees and other affiliates have bolstered their ownership of the company. Jay Y. Lee and his two sisters face a multi-billion dollar inheritance tax burden in the event their father and Group patriarch, 74-year-old Lee Kun-hee, passes away. The elder Lee remains incapacitated following a May 2014 heart attack.

Increased payouts following a would also benefit Samsung's other investors.

What are the potential obstacles?

executives said on Tuesday they need to consider various potential implications of moving to a structure, such as potential changes in how the company would be taxed and other regulatory requirements.

South Korean laws also mandate a must own at least 30 per cent of its publicly traded affiliates. would need to buy additional in companies such as SDI Co Ltd, Electro-Mechanics Co Ltd and SDS Co Ltd to meet such requirements, which could cost it billions of dollars.

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Business Standard
177 22

Samsung Electronics mulls over restructuring: 5 things to know

Samsung Electronics Co Ltd said it is considering whether to create a holding company as part of a corporate restructuring review

Tech giant Co Ltd said on Tuesday it is considering whether to create a as part of a corporate review.

Following are some details on the deliberations and implications of any change implemented:

What is a holding company?

A is one that owns other companies' stock. Holding companies typically do not run their own businesses and are used to control various affiliates or subsidiaries.

South Korea's government is pushing local conglomerates to gradually move to a structure to improve transparency and corporate governance.

Some of the country's biggest conglomerates such as LG Group have established a in order to streamline their ownership structure.

Why would consider such a move?

and analysts have long suspected that will move to split itself into an ownership company and an operating company as part of a complicated set of steps to boost Jay Y. Lee and other Group founding Lee family heirs' control of the conglomerate's top company.

While did not comment on how it might transition to a structure, analysts say could engineer a split in a way that existing shareholders are left with in both the ownership company and the operating company.

Samsung's then can offer its own to in exchange for in the operating company. This would boost the ownership company's stake in the operating company while providing a way for the Lee family and other Group affiliates to raise their stake in the ownership company.

Why now?

U.S. activist hedge fund Elliott Management, which owns 0.6 per cent of Samsung, in October proposed that be split in two as part of a wide-ranging set of proposals the fund says will boost shareholder value.

said last month it would respond to Elliott's proposals by the end of November.

How would such a benefit investors?

Elliott has argued such a move would help streamline Group's complicated ownership structure and improve transparency, thus improving valuation of Samsung.

Some say may boost payouts once the Lees and other affiliates have bolstered their ownership of the company. Jay Y. Lee and his two sisters face a multi-billion dollar inheritance tax burden in the event their father and Group patriarch, 74-year-old Lee Kun-hee, passes away. The elder Lee remains incapacitated following a May 2014 heart attack.

Increased payouts following a would also benefit Samsung's other investors.

What are the potential obstacles?

executives said on Tuesday they need to consider various potential implications of moving to a structure, such as potential changes in how the company would be taxed and other regulatory requirements.

South Korean laws also mandate a must own at least 30 per cent of its publicly traded affiliates. would need to buy additional in companies such as SDI Co Ltd, Electro-Mechanics Co Ltd and SDS Co Ltd to meet such requirements, which could cost it billions of dollars.

image
Business Standard
177 22

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