Elliott pull for Samsung makeover puts first family skeleton underneath microscope

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(Starts new cycle)

* Samsung reviews account proposals for new corporate structure

* Shares adult 5 pct to new high; some investors voice support

* Move comes as Lee family negotiates care succession

* Elliott fought Samsung Group over partnership of 2 arms in 2015

* Samsung still roiled by problems with Note 7 smartphone

By Se Young Lee

SEOUL, Oct 6 (Reuters) – Samsung Electronics Co
shares jumped to a record high on Thursday after activist
investor Elliott Management submitted unsolicited proposals for
a radical corporate makeover during a world’s biggest smartphone
maker.

An try by a U.S. sidestep account to wring change during South
Korea’s biggest organisation final year unsuccessful in acrimony. But
investors and analysts pronounced Elliott’s latest pierce could open the
way for a first Lee family to welcome change, cementing its
grip as it negotiates period from a bum primogenitor to
the subsequent era and a large estate taxation bill.

The proceed on Wednesday by Elliott, that owns 0.62
percent of Samsung Electronics, came as a tech hulk faced
fresh claims of problems with a flagship Note 7 smartphone,
with a news that a handset began smoking inside a U.S. plane
on Wednesday. Last month’s tellurian remember of 2.5 million devices
is set to uncover adult in medium gain expansion superintendence a organisation is
expected to news on Friday.

Samsung pronounced it will “carefully review” Elliott proposals
for restructuring, bursting a organisation into a holding car for
ownership functions and an handling company, as good as a hefty
30 trillion won ($27 billion) special division from a $70
billion money pile. Shares rose as most as 5 percent to a new
record as other minority investors uttered support.

“This came during a right time for Samsung,” pronounced Daishin
Economic Research Institute researcher Ahn Sang-hee. “It’s as if
someone came and strike their impertinence only when they wanted to cry.
In Samsung Group’s box they have substantially wanted to say
something like this and now a unfamiliar stakeholder has spoken
up.”

The destiny of Samsung, including a period plans, has
been a matter of heated inspection given organisation primogenitor Lee
Kun-hee, now 74, was incapacitated by a heart conflict in May
2014.

Though there have been countless theories on how a Lee
heirs – Jay Y. Lee, 48, seen as a de facto personality of the
Samsung Group conglomerate, and his dual sisters – will
ultimately secure control of Samsung Electronics, a group’s
flagship company, a family has nonetheless to publicly plead its
plans.

‘COMMON SENSE’

Many analysts and investors trust Samsung Group will seek
a “de-merger” along a lines sought by Elliott in a proceed that
increases a Lees’ proceed control of a conglomerate’s crown
jewel. The family members’ sum interest in Samsung Electronics
is 4.9 percent, formed on a Sept. 9 filing and a organisation has a
market value of about $230 billion.

Samsung declined to criticism on either it was in direct
contact with $27 billion account Elliott on a latter’s approach.
Elliott on Wednesday pronounced a offer would concede a Lee
family to keep a control of Samsung Electronics and also
simplify a group’s tenure structure.

Relations between Samsung and Elliott, founded by
billionaire Paul Singer, soured final year in a lengthy, bitter
feud over a partnership of dual Samsung affiliates. The deal, seen as
a stepping mill in a family period plan, was against by
the account as not charity investors full value though eventually
went through.

It was not immediately transparent either Elliott had already
begun communicating with other shareholders, though some Samsung
Electronics investors publicly corroborated a U.S. fund’s push.

“We are understanding of restructuring and a aloft dividend
payout to clear a value in a business,” Andrew Gillan, head
of Asia ex-Japan during Henderson Global Investors, told Reuters in
an email on Thursday. Henderson owns 0.12 percent of Samsung
Electronics, according to Thomson Reuters data.

Dutch grant account APG Asset Management, that has a 0.8
percent stake, pronounced it was certain about Elliott’s proposals.
“Elliott is not creation extreme demands. What they are saying
is in line with common sense,” pronounced Park Yoo-kyung, a Hong
Kong-based executive specialising in corporate governance during the
Dutch fund.

Analysts pronounced Elliott’s proposals will expected lead to
further vigour from offshore investors for a organisation to
open adult on a skeleton and make certain their interests are protected
in any serve restructuring. Of Samsung Electronics’ tip 20
shareholders, a sum of 11 are general investors,
according to Thomson Reuters data.

Meanwhile a mouthpiece for South Korea’s National Pension
Service (NPS), a biggest financier in Samsung Electronics with
a 9.2 percent stake, pronounced it was monitoring a situation, but
said it was too early to make comment. The NPS played a
significant purpose in a Samsung-Elliott squabble final year, its
backing for a understanding assisting to secure a passage.

($1 = 1,109.9000 won)

(Additional stating by Hyunjoo Jin, Christine Kim and Joyce
Lee in SEOUL and Nichola Saminather in SINGAPORE; Editing by
Kenneth Maxwell)

Read a strange essay on Reuters. Copyright 2016. Follow Reuters on Twitter.

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