Seoul/New York: Tech monster Samsung Electronics Co Ltd said on Thursday it will painstakingly audit recommendations made by U.S. fence stock investments Elliott Management for rebuilding and an uncommon profit, pushing the association’s shares to a record high.
The dissident speculator sent a letter to the world’s No. 1 cell phone producer on Wednesday, explaining changes that incorporate part into a holding organization and posting its working organization on the Nasdaq stock trade.
Samsung said in an announcement that it would precisely consider the proposition, including the firm “has faith in a useful and open exchange with financial specialists with a perspective to expanding shareholder esteem.”
Samsung offers bounced as much as 5 percent to stamp another high in morning exchange, outflanking a 0.6 ascent for the more extensive business sector.
Elliott’s most recent extremist target is amidst an administration progression and is under weight subsequent to issuing a remarkable review of no less than 2.5 million Galaxy Note 7 cell phones a month ago.
Samsung’s readiness to consider Elliott’s recommendations helped the stock disregard restored worries about the review after proprietors of a substitution Note 7 said its battery had started smoking in U.S. plane.
This has incited crisp examinations by the Consumer Product Safety Commission and the Federal Aviation Administration. Samsung said it was attempting to recuperate the gadget and that it can’t affirm whether the gadget being referred to is a substitution Note 7 until it can recover it.
Elliott, founded by billionaire Paul Singer, owns 0.62 percent of Samsung’s shares. The $27 billion hedge fund also called into question Samsung’s corporate governance and said the family-run company should add three new independent directors to its board.
Elliott said the new holding company should look at a possible all-stock merger with Samsung C&T Corp – a subsidiary that the New York hedge fund targeted in a heated shareholder battle last year. Elliott ultimately failed to derail Samsung C&T’s merger with sister firm Cheil Industries Inc.
Samsung C&T declined to comment on Elliott’s merger proposal.
U.S. hedge funds rarely target foreign companies for activist campaigns. Other than Third Point, a hedge fund active in Japan, Elliott is the only major U.S. activist with a significant presence in Asia.
With such a small stake and an already adversarial relationship, Elliott faces an uphill climb in convincing other shareholders and Samsung’s leadership team to implement its changes.
One factor that could help Elliott in its efforts is Samsung Electronic’s more international shareholder base.
Unlike the Samsung C&T battle, where the majority of shareholders were domestic investors, 11 of Samsung Electronic’s top 20 shareholders are international investors, according to Thomson Reuters data.
U.S. activist ValueAct Capital was given a board seat at Microsoft Corp. in 2013, while holding only 0.8 percent of the company’s stock.
According to a person familiar with the matter, Elliott is seeking to speak with Samsung’s leaders and board, and work with the company collaboratively to implement its proposed changes. Samsung did not immediately comment on whether it has been in communications with Elliott.
Elliott’s proposals come as Samsung Group has undertaken a series of moves to pave the way for a stable handover from the ailing, 74-year-old Lee Kun-hee to his three children.
Lee’s son, Jay Y. Lee, 48, is seen as the de facto leader of Samsung Group as his father remains incapacitated following a 2014 heart attack. The younger Lee was nominated as a board director of Samsung Electronics last month – a role that analyst says will allow him to take a more public role in major strategic decisions.
Speculation on how Samsung could restructure its business has loomed for at least a year, with analysts offering up a variety of options, including the so called “opco/holdco” division that Elliott proposed on Wednesday.
Elliott nodded to Samsung’s recent stock buyback, but said its “substantial and excess net cash position comes at a very real and tangible cost to shareholders.”
Elliott said it wants Samsung to pay a 30 trillion won ($27 billion) special dividend from its $70 billion cash pile.