Samsung shares hit record high after US investor proposes restructure plan

Samsung Electronic’s shares were at an all-time high on Thursday after US hedge fund investor Elliot Management Corporation (EMC) called on the electronics maker to simplify its organisational structure.

Elliot proposed that Samsung should separate into an operating company and a holding company, dual-list the former on ta US exchange as well as pay shareholders a special dividend of 30trn Korean won ($27bn) and improve governance by adding three independent board members.

As a result shares rose 5% to 1.69m Korean won in Seoul, the highest since June 1975, as minority investors showed their support for the change.

Andrew Gillan of Henderson Global Investors, which owns 0.12% of Samsung Electronics, said: “We are supportive of restructuring and a higher dividend payout to unlock the value in the business.”

Dutch pension fund APG Asset Management, which has a 0.8% stake, said: “Elliott is not making excessive demands. What they are saying is in line with common sense.”

EMC, who owns 0.62% of Samsung electronics, proposed the change soon after reports surfaced about Samsung’s Galaxy Note 7 smartphone emitting smoke on a SouthWest Airlines flight causing an emergency evacuation in Kentucky on Wednesday.

The incident wasn’t the first time, with Samsung recalling 2.5m smartphones last month after several incidents of fires caused by the phone were reported.

Ahn Sang-hee, an analyst at the Daishin Economic Research Institute, said: “This came at the right time for Samsung. It’s as if someone came and hit their cheek just when they wanted to cry. In Samsung Group’s case, they have probably wanted to say something like this and now a foreign stakeholder has spoken up.”

The future of Samsung including its succession plan has been unclear since the group patriarch Lee Kun-hee had a heart attack in May 2014, and has not been back since.

Billionaire activist and Founder of EMC Paul Elliott Singer is betting Samsung Electronics’s heir, Kun-hee’s son Jay Y. Lee, is keen take up his proposal in order to modernize his family’s empire without losing control, according to Bloomberg.

Analysts and investors predict that the Samsung Group will seek a de-merger similar to that proposed by EMC in a way that increases the Lees’ direct control of Samsung Electronics.

Samsung has declined to comment on whether it was in direct contact with EMC over the approach.

The two companies were caught in a row last year over a merger of two Samsung affiliates. The deal was seen as integral for the Lee family succession plan but was opposed by the fund for not offering investors full value but eventually went through.