South Korea is known as the Republic of Samsung and rightly so. There are about 80 companies under the Samsung group umbrella dealing in everything ranging from robotics to finance and construction, even silicon chips, Samsung Electronics being, by far, the most successful of them all.
Samsung Electronics has somewhat of a roller-coaster rider over the past few years. Losing multi-billion dollar legal battles with Apple and other tech heavyweights is not exactly something that a company enjoys, you know. The effect of such events does trickle down to each individual employee and demoralized employees are a surefire way of bringing a company down. This wasn’t to be the end of Samsung’s woes though, as it’s currently going through a pretty serious father-son leadership transition.
At the heart of the transition lies a vote that could either sway the transition in the favor of the incumbent leader’s son, Lee Jae-Yong, or it could result in total mess of the Samsung empire. The blame goes mainly to the convoluted Korean business ownership model where companies can own stakes in each other and become proxied owners of stakes in other companies. It gets quite confusing, honestly.
As you can imagine, this business model immensely complicates matters but Korea attributes Samsung’s success to this very model and there’s little that can be done at this point to change their thinking.
The centre of the whole debate is the proposed merger of textile firm Cheil Industries and Samsung Construction and Trading. If shareholders vote two-thirds in favor of the proposed move, it’ll be a win for Lee Jae-Yong. However, if more than one-third of them vote against the merger, Elliot Associates will have succeeded in their purpose. Why is Elliot Associates is in such staunch opposition? The answer is simple: Elliot Associates seeks to gain a higher profit from a merger of the companies in the future than the move being proposed now. If Cheil Industries was allowed to flourish on its own, its share values are predicted to skyrocket.
Samsung Electronics have tried to appease, and in a way bribe their shareholders by sending them watermelon as gifts (I’m serious). It remains to be seen whose favor the vote ends in. One thing is quite clear though: The world’s largest Android device maker is going through one of the toughest periods in its entire lifetime.
-Written by Umair Ahmed