Samsung Says It Won't Become a Holding Company

By Eun-Young Jeong Features Dow Jones Newswires

Samsung Electronics Co. said Thursday it won't adopt a holding-company structure, putting an end to a monthslong corporate-governance review.

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Investors and government officials had demanded that the company explore options to reform South Korea's biggest business empire.

Samsung Electronics said in a statement that transitioning to a holding-company structure would compromise its competitiveness and be a drag on its operations.

"Samsung concluded the risks and the challenging environment surrounding a change in the corporate structure would not be beneficial for enhancing shareholder value and sustaining long-term business growth," Samsung's board of directors said in the statement.

The announcement came as Samsung reported its second-highest quarterly operating profit in its history.

Samsung first announced that it would look into a holding-company structure last November following demands from investors, including U.S. hedge fund Elliott Management Corp.

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At its annual shareholders meeting last month, Kwon Oh-hyun, the company's chief executive, had suggested that Samsung saw challenges in adopting a holding-company structure, citing "adverse implications" to the structural change.

Samsung has often come under fire from investors, regulators and corporate-governance advocates for its complex cross-shareholding structure across its roughly 60 affiliates. Critics say the opaque corporate structure enables the controlling family to keep an outsize grip on the company despite a relatively modest shareholding.

Write to Eun-Young Jeong at Eun-Young.Jeong@wsj.com

Timothy W. Martin contributed to this article

(END) Dow Jones Newswires

April 26, 2017 21:23 ET (01:23 GMT)