Samsung, the South Korea-based tech conglomerate, is reportedly considering dividing the company into two parts.
Officially partitioning a large company is usually done for two main reasons: to reorganize and bolster the management structure, and to increase shareholder value.
This measure was suggested by U.S. hedge fund management corporation Elliott Management, which owns 0.6 percent of Samsung, according to The Seoul Economic Daily, as reported by Reuters.
Dividing the large company into two parts, one for ownership purposes and the other for operations, could allow for one of the two newly separated company to grow at a much faster rate, while the other continues on at a slower pace.
“It’s difficult to argue with the logic of Elliott’s proposals,” David Smith, head of corporate governance at Aberdeen Asset Management Asia, told Reuters.
“A simpler structure is certainly preferable, and yes most would agree they can afford to pay out more. What is important is that these changes should benefit all involved, including family, group, and minority shareholders,” he continued.
Samsung plans on conducting a conference call Tuesday pertaining to the potential maneuver.
The international tech company may feel compelled to make some sort of relatively aggressive business move after its Galaxy Note 7 smartphone reportedly caught on fire for multiple consumers.
Samsung’s stock plunged to its lowest ever share price in September, according to MarketWatch.
After some delay, the mobile device was eventually forbidden from being permitted on airplanes. (RELATED: Pilot Kicks People Off Flight After Samsung ‘Galaxy Note 7’ Found On WiFi List)
The company suffered a great deal of criticism. China, the world’s largest market, for example, felt Samsung misled customers in the country because the company originally said smartphones in the country were not affected by the battery defect.
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