Samsung Electronics initially said it would “carefully” review the demand of demerger as well as bold overhaul moves from one of its shareholders and U.S. activist investor Elliot Management Corp., but industry pundits do not believe the Korea’s top company is that serious.

The U.S. fund made four proposals to Samsung Electronics Co. in a letter released on Wednesday: splitting it into a holding and separate operating entity, listing the operating company on the U.S. Nasdaq market, paying shareholders a special dividend of 30 trillion won ($27 billion), and improving governance by adding three independent directors on the boards.

The idea of demerger or creation of a holding company is one that would serve Samsung well as Samsung Group has been preparing power shift from father Lee Kun-hee to son Jay Y. Lee. The group is said to have already been looking deeply into a new structure to strengthen the legitimate command by the younger Lee.

The U.S. fund has suggested Samsung Electronics split into a holding company which should then seek legitimate equity merger with Samsung C&T that currently acts as the holding company for the conglomerate so that the Lee family can continue to exercise legitimate ownership and influence over the group.

The demand for one-time dividend payout of 30 trillion won, or 245,000 won per share, out of its company’s rich cash hoard of over $70 billion, is one that company won’t likely accept.

The company has completed the stock buyback worth 11.3 trillion won since October to push up shareholders’ value. “In order to pay back returns to shareholders, we must continue to explore new growth engine and make investments. We simply cannot hand out dividends because we have sufficient capital set aside,” a company official said.

Samsung Electronics also won’t deem Nasdaq-listing an option for now as it does not require big funds and its depositary receipts are already listed on the U.S. stock exchange. The cost of coming under separate securities law and scrutiny of U.S. authority for the family-run conglomerate would be bigger than the returns.

Given its unique family-run leadership structure, the company also would be uncomfortable about reserving extra sets for outside members on the board.

By Lee Seung-hoon

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