Billionaire activist Paul Elliott Singer is betting Samsung Electronics Co.?s heir apparent is so keen to modernize his family?s empire without losing control that he?ll embrace a complex proposal to break up the company, say people familiar with the matter.
Singer?s Elliott Management Corp. — through affiliates Blake Capital LLC and Potter Capital LLC — proposed that Samsung separate into an operating company and a holding company, dual-list the former on a U.S. exchange, pay shareholders a special dividend of 30 trillion Korean won ($27 billion) and improve governance by adding three independent board members. Elliott is arguing that the new plan would make Samsung Electronics? business more transparent, simplify the ownership structure and provide tax benefits, all of which would push up the stock. Shares surged as much as 5 percent to a record high.
Last year, Elliott narrowly lost a bid to halt a takeover by parent Samsung Group that the firm deemed a bad deal for investors. Elliott?s proposal Wednesday may be in the interest of Samsung?s heir apparent Jay Y. Lee because he needs to put his stamp on South Korea?s largest conglomerate and embrace more shareholder-friendly governance. Plus, while Elliott lost the last fight, it was an eye-opening education for many South Korean investors.
