Samsung may opt for early stock split

By Kim Yoo-chul

Samsung Electronics will likely conduct a stock split sooner rather than later with the purpose of achieving a prompt and smooth transition in its leadership, a renowned analyst said in a recent interview.

“Core businesses remain largely intact and there is potential for improved cash return and a higher dividend following the split,” Market Securities analyst Gerald Goo told The Korea Times. The firm is part of the U.K.-based KYTE Group.

The tech firm left the markets guessing over its stock split plans for about two weeks, until finally it confirmed that it had in fact been considering one for years in a Jan. 29 conference call.

“In Samsung’s case, it is to ensure that the inheritance tax liability of the Lee family is managed,” the analyst said.

He said it is different from Apple’s case.

“Apple had tremendous pressure from its stock owners to return cash and also to do a stock split to enable retail investors to participate,” he said.

He added that the split would be part of its restructuring process.

“We look forward to improved dividend yield through a consistent dividend structure, improved transparency and detangling of cross-shareholding. This will improve investor confidence and also enhance shareholder value.”

The restructuring process involves the sale of four non-core subsidiaries and the initial public offering (IPO) involving Samsung SDS and Cheil Industries.

Their timeframe is before the end of this year to take advantage of tax deferrals and asset monetization as stipulated in the Special Taxation Act

He also rejected the idea of creating a holding firm.

“We prefer the operating company, which holds all the core operating assets, rather than the holding firm, which house all the non-core assets, post-restructuring,” Goo said. “It will be a cleaner and more transparent asset structure. Non-core assets will be eliminated.”

On Samsung’s prospects on the Nasdaq, he said that it won’t take place anytime soon.

“The first priority for Samsung is to restructure domestically. This will make Samsung more attractive to overseas investors as it will be more transparent and more accountable to stock investors.”

If this proves to be successful, it is possible that if there is enough international shareholder demand, it’s possible that they might get listed through American depository receipts," he said.