Report: Samsung Electronics to Go Ahead With Business Split

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This year has not been the best year for Samsung Electronics, the arm of Samsung responsible for their mobile lineup, and even though things got off to a great start with the Galaxy S7 and Galaxy S7 Edge, the Galaxy Note 7 was nothing short of a disaster, and will no doubt have its impact felt for some time to come. Behind the scenes at Samsung, a power struggle of sorts has been playing out for some time. The massive company is a family company, and ever since Samsung's Chairman, Lee Kun-hee, was hospitalized by a heart attack, his son, Lee Jae-yong, has been looking to solidify his grip on the company. Last month, he was appointed Director of the firm, and now that the company has been listening to suggestions of splitting Samsung Electronics – the flagship company of the Samsung Group – into two businesses, a holding firm and an operating firm, it appears as though Lee Jae-yong quite likes the idea.

As Business Korea is reporting, Samsung Electronics is to go ahead with the split of Samsung Electronics. Samsung Electronics is apparently to split into an operating business and a holding business, which could lead to the former merging with other Samsung Group businesses, such as Samsung C&T and other firms. All of this becomes very complicated where stocks and shares are concerned, as there are 13.3 percent of Samsung Electronics locked in treasury shares, which under South Korean law do  not have any voting power, but if the firms split, then a holding firm would end up with 13.3 percent of the operating firm via these stocks. As for Lee Jae-yong, often referred to professional as Jay Y. Lee, he would end up with more control over Samsung. His share in the company would rise to an impressive 18.2 percent of the company, but the main reason behind this split is of course foreign investors outside of South Korea, which combined hold about half of the company.

This move would certainly help the founding family take better control of Samsung, but if they wish to purchase more stock, they would need to spend somewhere in the region of $2 Billion just to acquire a further 1 percent of Samsung Electronics. Whether or not the family has the money to take majority control is unclear, but investors outside of South Korea have been pushing for this split, with their reasoning being that the company is grossly undervalued, and that there's a lot more money to be made from the company. If the family is to take control of Samsung further, they might need to strike now, before the company becomes more valuable.

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For years now I've had a heavy interest in technology, growing up with 8-bit computers and gaming consoles has fed into an addiction to everything that beeps. Android saved me from the boredom of iOS years ago and I love watching the platform grow. As an avid reader and writer nothing pleases me more than to write about the exciting world of Android, Google and mobile technology as a whole.

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