Potentially shifting from its hostile attitude against Samsung’s merger plan last year, Elliott Management Co., a US activist hedge fund, on Thursday proposed the South Korean electronics giant to reshape its corporate structure, saying it would not only increase the shareholders’ value but will also open a door for the new leadership.

Elliott, through its affiliates -- Blake Capital and Potter Capital -- sent a letter to Samsung Electronics’ board members to split the tech giant into holding and operating companies, and list the operating unit on the Nasdaq stock exchange. 

“We see this as a defining and a tremendous opportunity for the forthcoming new leadership of Samsung Electronics to further advance the company‘s remarkable legacy,” said a spokesperson of Blake and Potter, that hold a 0.62 percent stake in Samsung Electronics. Samsung remained calm on Thursday, saying it will “carefully consider” the proposal.

Regardless of what intention the US hedge fund may have, according to local experts, the proposal is expected to push Samsung’s restructuring efforts aimed at passing on the leadership of the nation’s largest conglomerate to the heir apparent, Lee Jae-yong.

“The logic behind the proposal is to resolve depressed market valuation of Samsung Electronics, but it has, in fact, set the cause for a plan that Samsung has been reluctant to come up with,” said Yoon Tae-ho, an analyst at Korea Investment and Securities.

Samsung has been, for years, seeking ways to complete the hereditary succession to its chairman’s only son Lee Jae-yong through high-profile splits, mergers and assets sales.

But the group has been reluctant in making a bold move without winning the shareholders’ endorsement, particularly after a bitter lesson it learned from a proxy fight between Elliott over the merger of two Samsung affiliates.

The nature of Elliott as a foreign hedge fund for the South Korean tech giant is hard to overlook, as its 50 percent of shares are in the hands of investors overseas.

This is why Samsung would find it difficult to embrace Elliott‘s additional demand on paying $27 billion in special dividends, as half of that money would eventually leave the country, which could be considered by many Koreans as an outflow of national wealth, observers pointed out. Having more outside directors as boardroom members, including those recommended by hedge funds, could also confuse Samsung’s decision making process, they added.

The transfer of equity ownership to Lee Jae-yong from his father has been a headache, as it costs the heir tens of billions of dollars in inheritance tax.

About 18 percent of the shares are held by the Lee family and affiliates, including Lee Kun-hee’s 3.44 percent, Lee Jae-yong’s 0.58 percent and Samsung C&T’s 4.8 percent. An additional 1 percent stake will cost him about 2.6 trillion won.

In this respect, Elliott’s proposal of having a holding company after a split of Samsung Electronics, is a tempting one and one that costs less, analysts said.

Samsung has been seeking the most efficient ways to consolidate the heir’s control within the group’s crown jewel that produces smartphones, computer chips and flat-screen TVs. Samsung Electronics contributes to nearly 75 percent of the group’s total revenue.

By setting up a holding company carved out from Samsung Electronics, the junior Lee may seek to make use of the company’s 12.4 percent treasury stocks, the watchers said.

A merger between the holding company and Samsung C&T, a de facto holding company of the group, afterwards would give him relatively large stakes.

Some even suggested that Samsung could accelerate the preparation of the next steps as Lee, the vice chairman of Samsung Electronics, joins the boardroom on Oct. 27. The move seen as him tightening his grip over tech giant, after its global recall of the Galaxy Note 7.

But it will be difficult for Samsung to do so right away, said Park Joo-keun, co-president of CEO Score, a local corporate tracker. The conglomerate has problems that need to be resolved before taking such actions on restructuring.

“Samsung may be in agony because what Elliott has said is a way of increasing Lee Jae-yong‘s control over Samsung Electronics,” he said.

“But it should complete turning Samsung Life into a holding company for the financial units first, and seek a way to repurchase Samsung Electronics shares held by Samsung Life. It won’t be easy and it would take a considerable time,” he said.

By law on financial companies, Samsung Life is required to drastically reduce its equity holdings in affiliates. Samsung Life holds 7.5 percent of Samsung Electronics shares.

By Cho Chung-un (christory@heraldcorp.com)